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US Session Highlights

(US) FEB TRADE BALANCE: -$43.6B V -$44.6BE: China: -$23.0B v -$31.3B prior

(US) Mar ISM New York: 56.5 v 51.3 prior

(US) FEB FINAL DURABLE GOODS ORDERS: 1.8% V 1.7%E; DURABLES EX-TRANSPORTATION : 0.5% V 0.4% PRELIM

(US) President Trump: going to do a “very major haircut” on Dodd-Frank regulations

Equities spent the day mostly flat, managing to close slightly higher on the day with little change from yesterday's close. Investors remained on the sidelines as they wait to see how the Supreme Court nomination and healthcare revival play out. With Easter break around the corner and reduced hope of Congress moving forward on economic policy, risk attractiveness has been decreasing.

US markets on close: Dow +0.2%, S&P500 +0.1%, Nasdaq +0.1%

Best Sector in S&P500: Energy

Worst Sector in S&P500: Real Estate

Biggest gainers: SPLS +9.8%; SWN +8.9%; CHK +6.8%; VRTX +4.5%; RRC +4.2%

Biggest losers: AYI -14.8%; NVDA -7.0%; JWN -5.5%; RL -4.5%; LB -4.4%

At the close: VIX 11.8 (-0.6pts); Treasuries: 2-yr 1.25% (flat), 10-yr 2.35% (flat), 30-yr 2.99% (flat)

US movers afterhours

INNL: Gurnet Point Capital said to be near agreement to acquire Innocoll - press; +62.1% afterhours

PNRA: JAB Holding reportedly in advanced talks to acquire Panera - press; +12.3% afterhours

LNDC: Reports Q3 $0.13 v $0.18e, R$136.6M v $136Me; +6.0% afterhours

SHLM: Reports Q2 $0.31 v $0.30e, R$568.7M v $574Me; Affirms FY17 EPS $2.08-2.18 v $2.11e, sales $2.5-2.6B v $2.44Be; +5.7% afterhours

TASR: CEO to hold a live broadcast at 12pmET on Apr 5th to "announce biggest news in company history" - press; +3.5% afterhours

Key economic data

(AU) AUSTRALIA MAR AIG PERF OF SERVICES INDEX: 51.7 V 49.0 PRIOR

(JP) JAPAN FEB SERVICES PMI: 52.9 (Highest reading since Aug 2015) V 51.3 PRIOR; COMPOSITE PMI: 52.9 V 52.2 PRIOR

(SG) SINGAPORE MAR PMI COMPOSITE: 52.2 V 51.4 PRIOR; Highest reading since Nov 2016

(KR) SOUTH KOREA MAR CURRENT ACCOUNT BALANCE: $8.4B V $5.3B PRIOR; GOODS BALANCE: $10.5B V $7.8B PRIOR

(NZ) NEW ZEALAND MAR ANZ JOB ADVERTISEMENTS M/M: 1.6% V 0.4% PRIOR

(NZ) New Zealand Mar QV House Prices Y/Y: 12.9% v 13.5% prior

(NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: +1.6% v +1.7% prior; 2nd straight increase

Asia Session Notable Observations, Speakers and Press

Asian equity markets are mixed in the wake of a modest gain on Wall St, as US stocks shook off two days of losses. The Energy sector was the best performer as oil rallied thanks in part to reports of a North Sea oil-field shutdown, adding to gain in electronic trade after API inventories data showed a surprise draw in crude. Real Estate and Financials lagged, even though US interest rates were little changed across the curve. High-end retail names were also sold after downgrades and a Ralph Lauren announcement it was shutting its flagship Fifth Avenue store.

Shanghai Composite is the best performing index in Asia, returning after two days of holidays on strong footing. Reports of a new special economic zone in at Xiongan New area in Hebei Province helped lift local property and industrials names. The rally comes even as PBoC continued to pull liquidity with no reverse repo ops for 8th straight day, draining estimated CNY90B.

High-profile meeting between Pres Trump and China counterpart Xi has been layered with added significance. North Korea continued to defy US warnings to suspend its nuclear program with another missile test as projectile flew 60km and fell into the East Sea.. Recall Trump said US would be prepared to take unilateral action if he cannot get China to apply more pressure on Pyongyang. Japan has also convened a NSC meeting to discuss North Korean threat, while US State Sec Tillerson remarked that US has spoken enough about North Korea, declining to comment further.

Economic data were centered around Services PMI figures that saw Japan hit mid-2015 highs, Singapore late-2016 highs, and Australia return from contraction into expansion.

China

(CN) China govt announced new special economic zone at Xiongan New area in Hebei Province - financial press

(CN) BoCom Chief economist Lian Ping: China Q1 CPI may come below expectations - China Daily

Korea

(KR) North Korea said to have fired a projectile missile - Korean press citing military officials

(KR) US Sec of State Tillerson: North Korea launched yet another intermediate range ballistic missile; the US has spoken enough about North Korea, no further comment

(KR) Estimates by global investment banks expect South Korea Q1 GDP to accelerate from Q4 levels - Korean press

(KR) South Korea Fin Min Yoo: Economy showing signs of recovery - press

(KR) Bank of Korea (BOK) Gov Lee: Seeing signs of a recovery in sentiment; Policy efforts needed to boost domestic consumer sentiment

Asian Equity Indices/Futures (00:30ET)

Nikkei -0.1%, Hang Seng -0.2%, Shanghai Composite +1.1%, ASX200 flat, Kospi -0.6%

Equity Futures: S&P500 -0.1%; Nasdaq -0.1%, Dax -0.2%, FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0670-1.0685; JPY 110.55-90; AUD 0.7560-0.7575; NZD 0.6970-0.6985

June Gold -0.1% at 1,257/oz; May Crude Oil +0.6% at $51.32/brl; May Copper +1.0% at $2.65/lb

(US) Weekly API Oil Inventories: Crude: -1.8M v +1.9M prior; first draw in 3 weeks

iShares Silver Trust ETF daily holdings fall to 10,242 tonnes from 10,274 tonnes prior; 4th straight decline

(CN) PBoC skips open market operations for 8th straight session; Drains CNY90B

(CN) PBOC SETS YUAN MID POINT AT 6.8906 V 6.8993 PRIOR

(CN) China MoF sells 1-yr bonds at 2.9463%; bid-to-cover 1.5x; Sells 10-yr bonds at 3.2733%; bid-to-cover 1.64x

(JP) Japan MoF sells ¥2.66T in 6-month bills; avg yield -0.149%; bid-to-cover ratio 4.49x

(KR) Bank of Korea (BOK) sells KRW2.7T v KRW2.7T indicated in 2-yr 1.6% monetary stabilization bonds

(AU) Australia MoF sells A$800M in 2.75% 2028 bonds; avg yield 2.7480%; bid-to-cover 3.03x

Asia equities notable movers

Australia

SBM.AU St. Barbara +3.2% (Q3 result)

BPT.AU Beach Energy +3.9%, WPL.AU Woodside Petroleum +1.5% (oil gains)

WES.AU Wesfarmers -1.8% (JPMorgan downgrades)

IAG.AU Insurance Australia -1.8% (adjusts outlook)

Japan

6502.JP Toshiba Corporation +1.9% (possible buyer for Westinghouse)

2670.JP ABC-MART +0.3% (earnings speculation)

Hong Kong

322.HK Tingyi Cayman Islands Holding +3.2%

2038.HK FIH Mobile -12.8% (Credit Suisse downgrades)

China

600340.CN China Fortune Land Development +10.0%, 000401.CN Tangshan Jidong Cement Co +10.0%, 601992.CN BBMG +10.0%, 600717.CN Tianjin Port Development Holdings +10.0% (China new special economic zone)

Weekly
    •    Last Candlesticks pattern: Morning star
    •    Time of formation: 2 Jan 2017
    •    Trend bias: Sideways

Daily
    •    Last Candlesticks pattern: Long white candlestick
    •    Time of formation: 15 Mar 2017
    •    Trend bias: Up



Although aussie has slipped again after meeting resistance at 0.7680 and consolidation with initial downside bias is seen, as long as support at 0.7491 holds, prospect of another rebound remains and break of said resistance at 0.7680 would signal the retreat from 0.7750 has ended, bring retest of this level, break there would extend gain to previous chart resistance at 0.7778, however, break there is needed to retain bullishness and confirm early erratic upmove from 0.6827 (2016 low) has resumed for retest of 0.7835 (2016 high) first but sharp move beyond 0.7900-10 should not be repeated and price should falter well below psychological resistance at 0.8000. 



On the downside, whilst marginal weakness from here cannot be ruled out, reckon said support at 0.7491 would hold and bring another rise. A daily close below indicated support at 0.7491 would abort and signal recent rise from 0.7158 has ended, risk weakness to the lower Kumo (now at 0.7450) and then towards 0.7400 which is likely to hold from here, bring another upmove later. 



Recommendation: Hold long entered at 0.7600 for 0.7800 with stop below 0.7500.



On the weekly chart, aussie’s retreat after marginal rise to 0.7750 suggests consolidation below previous resistance at 0.7778 would be seen and pullback to the upper Kumo (now at 0.7545) cannot be ruled out before prospect of another rise later to 0.7750 and possibly test of 0.7778 resistance but as broad outlook remains consolidative, reckon upside would be limited and price should falter below 2016 high at 0.7835. Looking ahead, only above this level would suggest an upside break of recent established broad range has occurred, bring further subsequent rise to 0.7900 and later towards psychological level at 0.8000.

On the downside, whilst pullback to the upper Kumo (now at 0.7545) cannot be ruled out, price should stay well above support at 0.7491 and bring another rise later. A weekly close below said support at 0.7491 would suggest top is formed, bring test of the Kijun-Sen (now at 0.7468), a sustained breach below this level would signal the rise from 0.7158 has ended instead, risk further fall to 0.7400.

For the 24 hours to 23:00 GMT, the AUD declined 0.49% against the USD and closed at 0.7565.

LME Copper prices declined 1.6% or $92.5/MT to $5724.5/MT. Aluminium prices declined 0.5% or $10.5/MT to $1938.0/MT.

In the Asian session, at GMT0300, the pair is trading at 0.7570, with the AUD trading 0.07% higher against the USD from yesterday's close, after overnight data showed an expansion in Australia's service sector in March.

Data revealed that Australia's AIG performance of services index recorded a rise to a level of 51.7 in March, crawling out of the expansion territory, compared to a level of 49.0 in the prior month.

The pair is expected to find support at 0.7537, and a fall through could take it to the next support level of 0.7505. The pair is expected to find its first resistance at 0.7607, and a rise through could take it to the next resistance level of 0.7645.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.38% against the USD and closed at 1.2436, after data showed that British construction sector lost momentum last month.

UK's Markit construction PMI unexpectedly fell to a level of 52.2 in March, offering latest sign that the nation's economy may be running out of steam. Markets expected the PMI to remain steady at a level of 52.5.

In the Asian session, at GMT0300, the pair is trading at 1.2441, with the GBP trading a tad higher against the USD from yesterday's close.

The pair is expected to find support at 1.2407, and a fall through could take it to the next support level of 1.2374. The pair is expected to find its first resistance at 1.2484, and a rise through could take it to the next resistance level of 1.2528.

Looking ahead, market participants will keep a close watch on UK's Markit services PMI for March, set to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD marginally declined against the JPY and closed at 110.82.

In the Asian session, at GMT0300, the pair is trading at 110.70, with the USD trading 0.11% lower against the JPY from yesterday's close.

The Japanese Yen gained ground, after early morning data indicated that activity in Japan's services sector jumped to a level of 52.9 in March, accelerating at its fastest pace in 19 months and hinting that the world's third largest economy continues to strengthen. The PMI had registered a reading of 51.3 in the previous month.

The pair is expected to find support at 110.32, and a fall through could take it to the next support level of 109.95. The pair is expected to find its first resistance at 110.99, and a rise through could take it to the next resistance level of 111.29.

Going ahead, traders would concentrate on Japan's consumer confidence index for March, scheduled to release tomorrow.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD marginally declined against the CHF and closed at 1.0015.

In the Asian session, at GMT0300, the pair is trading at 1.0023, with the USD trading 0.08% higher against the CHF from yesterday’s close.

The pair is expected to find support at 1.0009, and a fall through could take it to the next support level of 0.9995. The pair is expected to find its first resistance at 1.0037, and a rise through could take it to the next resistance level of 1.0051.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.1% against the CAD and closed at 1.3397.

The Canadian Dollar lost ground, after Canada surprisingly posted an international merchandise trade deficit of C$0.97 billion in February, following a revised surplus of C$0.42 billion in the previous month, whereas markets were expecting the nation to record a surplus of C$0.60 billion.

In the Asian session, at GMT0300, the pair is trading at 1.3392, with the USD trading a tad lower against the CAD from yesterday’s close.

The pair is expected to find support at 1.3358, and a fall through could take it to the next support level of 1.3323. The pair is expected to find its first resistance at 1.3441, and a rise through could take it to the next resistance level of 1.3489.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

Key Points:

• Long-term ABC wave could carry the pair substantially lower.
• MACD signal line hinting at a continuation of the long-term downtrend.
• Current support could present a challenge to this forecast.

The Kiwi Dollar's losses may still have a ways to go before the long-term downtrend finally releases the pair. Specifically, we could even see the 0.6668 handle in the crosshairs as the final stages of a corrective wave take place over the coming week. As a result, it's likely to be worth one's while to take a closer look at this generally embattled pair.

First and foremost, whilst the downtrend thatbegan in February probably hasn't gone unnoticed by many, the fact that this might simply be the latest leg of a much larger pattern may be news to some. In particular, it looks as though this most recent slide represents the 'C' leg of a broader corrective ABC wave that took hold in the wake of the last year'supswing. As for what this could mean moving forward, it now looks as though losses for the NZDUSD could extend far beyond where we might have initially expected them to

Indeed, chart patterns aside, a number of other instruments seem to be in favour of an overall bullish phase for the Kiwi Dollar in the weeks and months to come. Namely, we have the parabolic SAR firmly in bearish territory which would usually predispose the pair to move lower moving ahead. Of course, this is in line with the EMA bias which is highly indicative of downside risks. However, the most telling insight comes from the MACD oscillator which is on the verge of seeing a full signal line crossover which would typically precede a notable downtrend.

Despite this rather compelling argument for further losses, an important level of indication to keep an eye on is the 0.6956 mark. Predominantly, the presence of a rather well-tested reversal point is casting some doubt of continued losses in the near-term. However, this price also corresponds with the 76.8% Fibonacci retracement which could also add to fears of a short ranging phase prior to any further downside action. Ultimately, this level should givein, especially if the US fundamental data continues to come in above expectations in the coming sessions so monitor the NFP figures closely moving ahead.

Overall, the technical case for the above forecasted downtrend seems to have some legs, in this author's opinion at least. As a result, keep a close eye on the Kiwi Dollar over the coming sessions as it could present us with substantial downside potential. Moreover, monitor the fundamental front as any major uptick in the US data could be all that is needed to see the current support smashed and get this downtrend kick started.

Key Points:

• Libyan 'Force Majeure' event ceases.
• Russia meets around 66% of their pledged production cuts.
• Medium term outlook on oil remains unchanged with Q2 estimate of $47.20-$48.40.

Crude Oil prices largely headed in a positive direction last week as the market was beset by the risk of falling production following, what was termed, a 'Force Majeure' event. Subsequently, West Texas Intermediate (WTI) prices received an immediate boost and rallied back above the $50.00 handle. However, we now know that the event was largely due to warring factions blocking access to Libyan pipelines and that supply might have just been restored. Subsequently, it begs the question as to whether crude prices will face pressure as the additional supply returns to the global markets.

The return of the Shahara and Wafa oil fields to full production is definitely an unexpected surprise and required significant intervention following their blockading by armed factions early last week. The overall impact on Libyan crude oil production was stark given that those two fields represent around 36% of the embattled countries current output. Subsequently, the return of around 252k b/pd of crude production to the world markets is likely to have an immediate impact on prices.

However, although there is likely to be additional downward pressure on Crude Oil prices, Libya is likely to remain relatively unstable in the face of ongoing warfare amongst the various militias. Subsequently, it is highly likely that there will be further supply disruptions over the medium term until some form of government is re-established within the war torn state. The current regimes output goals remain focused on increasing productive capacity to 1.1 million b/pd within 2017 but that supply is likely to remain unstable at best.

In contrast, Russia is following through with much of their purported production cuts and, at last count, has cut over 200k b/pd, about two thirds of their original pledge. Although, the target for the OPEC and non-OPEC agreed cuts remains in place it seems difficult to foresee many nations fully reaching the pledged levels. Subsequently, there could be significant pressure on producers to cheat on the original agreement, or at least reduce their commitments, given the present levels of compliance by other nations. As always with OPEC deals, the devil is in the details and most members are not known for their adherence to cartel targets.

Subsequently, although crude oil prices might currently be residing around the $51.20 a barrel price (WTI), the old pressures of rebalancing are likely to return in the near term. Therefore, our medium term forecasts remain in place for WTI prices to return to the $47.20 - $48.400 level by the end of Q2, 2017. Rebalancing must still occur within the market and OPEC needs to get on board and realise that the new oil order is upon us.

EUR/USD

Price has bounced slightly overnight. While the outlook remains negative, the currency pair does look oversold in the short-term. Initial resistance is noted at 1.07, with stronger resistance then seen at 1.0718 and 1.0750 (38.2 % Fibonacci of the March Rally).

A rally to one of those aforementioned levels is likely to attract decent selling interest.

GBP/USD

The Cable came under pressure yesterday and broke below 1.2465 support. The currency pair extended losses to 1.2420, and while it bounced from there, it still lacks momentum for a larger recovery.

Should GBP/USD break below the trendline support and 1.2420, a test of the key 1.2340-75 area seems likely. The pair is likely to encounter strong support there, and buying it there seems attractive given the risk-reward.

USD/JPY

The Yen has recovered slightly in the past 12 hours of trading, but struggled with resistance in the 110.80-90 area. The short-term outlook remains negative, and selling rallies still the appropriate strategy.

Keep an eye on the 111.12 level, as USD/JPY is likely to encounter strong resistance there. A test of 110 seems likely in the near-term. Should the pair break below, downside momentum will accelerate sharply and a decline towards 108 is possible.

AUD/USD

Fell sharply after the RBA rate decision yesterday and remained under pressure during the rest of the day. Former support between 0.7580 and 0.7590 is now an interesting selling area for AUD bears.

Selling the Aussie Dollar there with a stop above 0.7610 could be an option. The currency pair has immediate support in form of the 200 DMA around 0.7550, but the next important level now lies at 0.7490.

USD/CAD

Price has gathered some positive momentum in the past two trading days. This comes after a period of consolidation in a 1.33-1.34 range. However, the currency pair failed to sustain gains above 1.34 and yesterday's candle on the Daily chart suggests a fake breakout.

The level to watch intraday is 1.3367 support. Should it fall back below this level, the fake breakout would be confirmed and a move towards the lower side of the range is highly likely.

XAUUSD

Gold failed once again at $1260-62 resistance yesterday. Nevertheless, momentum is still strong and demand should be good on any larger dip. $1240 is key – a break below that level would signal that Gold currently lacks the strength to clear resistance above $1260, and that a deeper correction is needed.

This seems unlikely at this point, though. Intraday, look at the $1250 and $1244 levels for good support.

WTI

WTI is showing increased strength. While the hourly charts suggest that the commodity is slightly overbought in the short-term, it will likely continue the rally towards $52.50 without any large pullback. Intraday, keep an eye on $50.90, which should act as solid support now.

For WTI bulls, buying here might be an option, as there is now little resistance until $52.50.