The Forex daily summary for 7 April features the following key notes:
- Australia AIG retail services index 50.2 vs. 51.7 previously
- Australia retail sales m/m 0.7% vs. 0.4%
- RBA cash rate unchanged at 2.25%
- Spain services PMI 57.3 vs. 56.6
- Italy services PMI 51.6 vs. 51.5
- Eurozone final services PMI 54.2 vs. 54.3
- Eurozone Sentix investor confidence 20 vs. 20.9
- UK services PMI 58.9 vs. 57.1
- Eurozone PPI m/m 0.5%
- US Jolts job openings
- US IBD/TIPP economic optimism
The Forex markets opened after a long Easter weekend break and volatility was clear across the board. The Asian session saw the retail sales numbers from Australia which beat estimates, rising 0.7%, on the backdrop of the February rate cut from the RBA. The retail sales data was followed by the April RBA monetary policy meeting. In a closely contested call, the RBA decided to leave interest rates unchanged while expecting to see further depreciation in the Australian dollar. The monetary policy statement was however neutral, which, combined by the inaction saw the Aussie dollar rally across the board.
The Japanese Yen remained muted for the most part ahead of the April BoJ monetary policy meeting due tomorrow. It is widely expected for the BoJ to stand pat on policy at this meeting, as speculations rise that the Japanese Central Bank could expand its monetary policy stimulus later down the road.
USDJPY managed to reverse its losses, rising from lows of 119.045 and looks poised to test the previous highs of 120.26. If the bullish momentum keeps up, USDJPY could extend its gains towards 121.175 in the near term.
The European trading session also opened today after a long weekend with the services PMI from Spain and Italy, both of which beat estimates. The Eurozone services PMI was however modestly weaker. Investor confidence also continued to rise in the region as the Sentix investor confidence printed 20, up from 18.6 previously, despite falling below estimates of 20.9.
The Euro was volatile today as the currency pair extended its losses after failing to keep its gains in its rally to 1.026. EURUSD went back to test the broken resistance for support at 1.0857 levels and a successful test of this support could prove to be bullish for the Euro.
From the UK, British services PMI beat estimates rising to 58.9. The Cable looked modestly bullish on the news but the larger election weakness continues to weigh in on the currency. GBPUSD was trading at 1.489 at the time of writing and remains range bound between 1.495 and 1.475.
The Greenback was looking to stabilize after the Dollar Index managed to trim its losses from previous lows near 96.55. However a major test of 97.8 is critical. If this level turns to resistance, the Dollar Index could see some sharp losses while a break above this level could see further upside gains towards 98.95.
There are no major news events scheduled from the US today. The markets will be looking towards the March FOMC meeting minutes which will be released tomorrow evening.