Daily Report: Euro Lifted by Germany GDP, Possible Head & Shoulder Bottom
The common currency strengthens against the greenback and Sterling in early European session after data showed growth in Germany accelerated to fastest pace is 12 years in Q1. GDP growth accelerated from 0.3% qoq in Q4 to 1.5% qoq in Q1, much stronger than expectation of 0.7%. Yoy rate was also up from 1.6% to 1.8%. The data is echoing ECB Trichet's comment that economic fundamentals in the Eurozone remains 'sound' and is supportive to ECB's stance to be on hold on the back of strong inflation. Focus now turns to Eurozone Q1 GDP which is expected to rise 0.5% qoq, up from prior 0.4% and 1.9% yoy, down from prior 2.2%. Upside surprise in the Eurozone GDP data will provide further support to the Euro. Also released today, Germany HICP final dropped -0.3% mom in Apr, with yoy rate rising 2.6%. Eurozone HICP final in Apr is expected to rise 0.3% mom, 3.3% yoy.
Technically speaking, EUR/USD possibly completing an intraday head and shoulder bottom and focus is on 1.5569/94 resistance. Break of which will suggest that a near term bottom is in place in EUR/USD and stronger rebound should then be seen. Such development may trigger broad based selling in the greenback which should also be seen in Swissy too.
A string of economic data will be released from the US today. Particular focus will be on Empire state & Philly Fed survey. Empire state manufacturing index is expected to stabilize at 0.6 after last month's sharp rebound from -22.2 to 0.63. Philly Fed index is expected to be up slightly from -24.9 to -20. Industrial production is expected to drop -0.1% mom in Apr. TIC capital flow is expected to drop slightly to 62.5b. NAHB housing market index is expected to be unchanged at 20.
Released overnight, Japanese machine orders dropped sharply by -8.3% mom in Mar, with yoy rate dropping -6.2%. New Zealand retail sales was surprisingly weak in Mar, falling -1.2%. Kiwi was sent sharply lower across the board after the release. Meanwhile, Aussie benefits from cross buying in AUD/NZD.
EUR/USD Daily Outlook
Daily Pivots: (S1) 1.5417; (P) 1.5452; (R1) 1.5507; More
EUR/USD's retreat was contained above mentioned 1.5363 minor support and rebounds strongly today. Outlook remains unchanged as further rally is still in favor as long as 1.5396 minor support holds. Also, the current development argues that EUR/USD might be completing an intraday head and shoulder bottom pattern (ls: 1.5360, h: 1.5284, rs: 1.5396). Focus is now on 1.5569/94 resistance and break will confirm the completion of the reversal pattern. In other words, decline from 1.6019 should have completed in such case and strong rebound could then be seen to retest this record high. On the downside, though, below 1.5396 will flip intraday bias back to the downside for retest of 1.5284 low first.
In the bigger picture, as mentioned before, EUR/USD's rise from 1.4309 should have completed at 1.6019 with a diagonal triangle pattern that started at 1.5342 and with bearish divergence condition in daily MACD and RSI. Deeper decline is in favor to be seen to 1.4309 and 1.4966 support zone. However, strong rebound from the current level, followed by break of 1.5594 resistance, will suggest that price actions from 1.6019 is probably just developing into another sideway consolidation. But still, short term risk is on the downside before sustained break of 1.6019 high.
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Economic Indicators Update
| GMT |
Ccy |
Events |
Actual |
Consensus |
Previous |
Revised |
| 22:45 |
NZD |
New Zealand Retail sales M/M Mar |
-1.20% |
N/A |
-0.70% |
|
| 23:50 |
JPY |
Japan Machine orders M/M Mar |
-8.30% |
-5.20% |
-12.7 |
-12.3 |
| 23:50 |
JPY |
Japan Machine orders Y/Y Mar |
-6.20% |
1.00% |
2.40% |
|
| 6:00 |
EUR |
Germany CPI final M/M Apr |
-0.20% |
-0.50% |
0.50% |
|
| 6:00 |
EUR |
Germany CPI final Y/Y Apr |
2.40% |
2.40% |
3.10% |
|
| 6:00 |
EUR |
Germany HICP final M/M Apr |
-0.30% |
-0.30% |
0.50% |
|
| 6:00 |
EUR |
Germany HICP final Y/Y Apr |
2.40% |
2.60% |
3.30% |
|
| 6:00 |
EUR |
Germany GDP Q/Q Q1 |
1.50% |
0.70% |
0.30% |
|
| 6:00 |
EUR |
Germany GDP Y/Y Q1 |
1.80% |
1.80% |
1.60% |
|
| 9:00 |
EUR |
Eurozone GDP Q/Q Q1 |
|
0.50% |
0.40% |
|
| 9:00 |
EUR |
Eurozone GDP Y/Y Q1 |
|
1.90% |
2.20% |
|
| 9:00 |
EUR |
Eurozone HICP final M/M Apr |
|
0.30% |
1.00% |
|
| 9:00 |
EUR |
Eurozone HICP final Y/Y Apr |
|
3.30% |
3.60% |
|
| 12:30 |
USD |
U.S. Jobless claims |
|
370K |
365 K |
|
| 12:30 |
USD |
U.S. Empire state mfg Mar |
|
0.60 |
0.63 |
|
| 13:00 |
USD |
U.S. Foreign treasury buys Mar |
|
N/A |
20.6 B |
|
| 13:00 |
USD |
U.S. Net LT TIC flows Mar |
|
62.5 B |
72.5 B |
|
| 13:15 |
USD |
U.S. Capacity utilisation Apr |
|
80.30% |
80.5 |
|
| 13:15 |
USD |
U.S. Industrial prod'n M/M Apr |
|
-0.10% |
0.30% |
|
| 14:00 |
USD |
U.S. Philadelphia Fed survey Mar |
|
-20 |
-24.9 |
|
| 17:00 |
USD |
U.S. NAHB housing mrkt index Mar |
|
20 |
20 |
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