USDJPY at Yearly High on Better US Q4 GDP

Asian markets traded broadly higher after positive Chinese economic data earlier today gave some optimism to markets with regards to concerns about the Chinese and global economic slowdown.  The Nikkei 225 in Tokyo was the leader with gains over one percent closed at 21,602, the Hang Seng in Hong Kong added 0.52 percent to 28,970 while the Shangai Composite trading 1.52 percent higher at 2,990 boosted by the inclusion of more China shares in the MSCI index.

The Aussie stocks kicked off the new month in positive territory, extending February’s 5.2% gains, which was the best monthly gain since July 2016. Almost all sectors improved, with the exception of the Energy, Industrials and Materials sectors. The ASX 200 closed up 23 points or 0.4% to 6,192. Over the week, the index rose 0.4%. Fed Chairman Powell’s reiteration of ‘patience’ also added to positive sentiment in Asian stocks.

Gold prices refreshed two-week lows near 1309 levels, having faded its recovery at 1315. Both crude benchmarks traded with moderate gains, with WTI well above the 57 area.

European equities are likely to pick up from here so expect similar tones to prevail in the next two hours or so as the cash equity market opens in Europe.

On the Lookout: US Gross Domestic Product rose 2.9 percent for the year, just shy of the 3 percent goal set by the Trump administration. In Australia, the RBA Commodity Index SDR (YoY) came in at 9.1%, above analyst’s forecasts (7.3%) in February. The Japan Consumer Confidence Index registered at 41.5, below expectations (41.6) in February and China’s Caixin manufacturing PMI rebounded to 49.9 in Feb.

A poll of economists by Reuters showed that a majority of them believe that the European Central Bank (ECB) is likely to keep the interest rates at record lows until next year, in the face of dwindling Eurozone economic growth.

In economic calendar today we expect the core PCE price index and personal spending at 13:30GMT and the Canadian Q4 GDP report is slated for release. At 14:30-14:45 GMT, the Markit manufacturing PMI reports from both the US and Canada will be published. However, the US ISM manufacturing PMI and UoM consumer sentiment data due at 15:00 GMT will be on the spotlight. Next of relevance remains the speech by the FOMC member Bostic and Baker Hughes US oil rigs count data at 18:00GMT.


Trading Perspective: The Aussie dollar jumped after better than expected Caixin China manufacturing PMI for February breaking above the 0.71 barrier. The Kiwi failed to get a boost by the better macro news and has been trapped in 20 pips trading range just above 0.68 area.  

EURUSD rejected yesterday for the second time at 1.14 but downside looks limited, I expect further consolidation in the near term between 1.1352 and 1.14. Only a convincing break above 1.14 can attract extra bids while a break below 1.1350 can force prices down to 1.13.

EURUSD Hourly (H1) Chart

In Euro futures markets traders scaled back their open interest positions by nearly 1.5K contracts on Thursday vs. Wednesday’s final 528,608 contracts. Volume, instead, rose sharply by around 67.5K contracts.

GBPUSD: Technical indicators positive picture is still intact for the pair after pullback at 1.3256, the RSI exit the overbought area, and the support at 1.3235 looks strong. A regain of 1.3280 area will attract bids to the yearly top.  

GBP futures markets noted open interest shrunk after two consecutive builds, this time by almost 4.8K contracts. In the same line, volume dropped by more than 4K contracts, recording the second pullback in a row.

USDJPY trading to fresh 2019 peaks near the 111.80 mark after better GDP numbers in the USA. The pair easily cleared the 200-day moving average with increasing volume at 111.35, and now an attempt at the 112 round figure is the most possible scenario. The 200-day moving average at 111.40 now has turned to strong support.

Open interest in JPY futures markets increased for the second straight session on Thursday, this time by around 7.5K contracts from Wednesday’s final 190.827 contracts. In the same line, volume rose by almost 46.5K contracts.

USDJPY Daily Chart