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Australian job creation surges

Australia posted a blowout employment report today, giving the Australian dollar a strong boost. The economy created 53,000 new jobs in March, after a downwardly revised 63,600 a month earlier. This crushed the estimate of 20,000 and especially impressed as full-time employment increased by 72,000 (part-time decreased by 19,200). Unemployment was unchanged at 3.5%, below the forecast of 3.6%.

What can we expect from the RBA? The central bank paused in March for the first time in the current rate-tightening cycle and Governor Lowe made clear that another pause was data-dependent. The next meeting is on May 2nd and the odds of a pause have eased to 78%, compared to 94% before the employment release. Australia releases the March inflation report less than a week prior to the meeting, and if inflation is higher than expected, the RBA will have to consider a 25-basis point increase in order to cool down the job market and inflation.

The recent bank crisis, which roiled the global financial markets, appears to have eased. Still, the extent of the fallout of the collapse of four US banks and Credit Suisse is not yet clear, and central banks need to give consideration to the crisis in mind as they determine their rate path.

RBA Deputy Governor Bullock addressed this issue on Wednesday, saying the RBA had considered a pause well before the bank crisis, and the bank decided on the non-move in order to protect job gains and to take into account lags in rate policy. Bullock maintained that there were no signs that the bank crisis had caused a tightening in financial conditions in Australia.

AUD/USD Technical

• There is resistance at 0.6897 and 0.6791
• AUD/USD tested support below 0.6700 earlier today. The next support level is 0.6608

Bundesbank President Joachim Nagel, in an interview with CNBC on the sidelines of the IMF Spring Meetings, described euro-zone price gains as "a very stubborn phenomenon" and emphasized the need for persistent action against inflation. Nagel stated, "it's definitely the case that we on the monetary-policy side have to be even more stubborn to fight against inflation."

Nagel acknowledged the necessity to do more on the inflation front, explaining that while headline inflation might be heading in the right direction, core inflation remains at a very elevated level. He expects core inflation to come down before summer but warned that it would likely stay at high levels for the next few months, requiring continued vigilance in addressing the inflation issue.

Regarding the German economy, Nagel expressed confidence in its ability to adapt and overcome challenges, stating that "the energy crisis is more or less solved." He added, "We had a really worried situation in the past, but this is now over, and the outlook is good.

NIESR estimated that UK GDP grew by 0.1% in Q1, an upgrade from prior forecasts -0.1% contraction. The early forecasts for Q2 sees quarterly growth rate picking up to 0.3%.

Paula Be jar a no Carbo Associate Economist, NIESR said: "The UK economic outlook for the first quarters of this year appears to be more resilient than previously thought, though broadly consistent with the longer-term trend of flatlining economic growth."

Full NIESR release here.

US PPI for final demand dropped -0.5% mom in March, well below expectation of 0.1% mom. Two-thirds of the decline in the PPI for final demand can be attributed to a -1.0% mom decrease in prices for final demand goods. The PPI for final demand services also moved down -0.3% mom. Prices for final demand less foods, energy, and trade services edged up 0.1% mom.

For the 12 months period, PPI dropped from 4.6% yoy to 2.7% yoy, below expectation of 2.7% yoy. PPI less foods, energy, and trade services was up 3.6% yoy.

Full US PPI release here.

US initial jobless claims rose 11k to 239k in the week ending April 8, above expectation of 235k. That's the highest level since January 15, 2022. Four-week moving average of continuing claims rose 2k to 240, highest since November 20, 2021.

Continuing claims dropped -13k to 1810k in the week ending April 1. Four-week moving average of continuing claims rose 9.5k to 1814k, highest since November 13, 2021.

Full US jobless claims release here.

The USDCHF fell to the lowest levels in more than two years on Thursday, as fresh weakness extends into third straight day.

Bears broke below psychological 0.90 support for the first time since June 2021, signaling continuation of larger downtrend from 1.0147 peak (Oct 2022) which paused for consolidation in first three months of 2023.

The latest dollar’s weakness was sparked by downbeat US CPI data, which pushed the price trough key supports and generated strong bearish signal.

Weekly close below 0.90 level to confirm signal and keep the pair en-route towards key med-term support at 0.8757 (Jan 2021 low), which guards pivot at 0.8705 (50% retracement of 2011/2016 0.7067/1.0343 rally / Apr-May 2014 higher base).

Bearish daily and weekly technical studies contribute to negative picture, although oversold conditions warn that bears may lose traction in coming sessions.

Broken 0.90 support and former range floor (0.9058) reverted to solid resistances which should limit potential upticks and keep bears intact.

Res: 0.9085; 0.9119; 0.9140; 0.9186.
Sup: 0.8871; 0.8757; 0.8705; 0.8634.

ETHUSD (Ethereum) has been stuck in an uptrend since the beginning of the year, generating a fresh nine-month high of 1,995 in today’s session following the successful completion of the long-awaited Shanghai upgrade. Now the focus turns to whether the pair can extend its 2023 rally and reclaim the 2,000 psychological mark.

The momentum indicators currently suggest that bullish forces are intensifying. Specifically, the RSI is attempting to cross above the 70-overbought territory, while the stochastic oscillators are ascending within the 80-overbought zone after posting a bullish cross.

Should Ethereum rise above the 2,000 psychological mark, the August 2022 peak of 2,030 could act as initial resistance. Breaching this territory, the price could ascend towards the 2,450 zone, which served as support and could act as resistance in the future. A break above this region could pave the way for the 3,030 hurdle.

Alternatively, if sellers re-emerge and push the price lower, immediate support could be met at 1,770. Should that floor collapse, the bears could aim for 1,690 before the February support of 1,463, which lies very close to the 200-day SMA, comes under examination. Even lower, the March bottom of 1,370 may provide downside protection.

Overall, the latest fundamental developments have given ETHUSD the necessary boost towards a fresh higher high. For the uptrend to resume though, the price needs to close above the 2,000 psychological mark. 

GBPJPY pair is still at the highs on a daily chart, which looks like a consolidation within uptrend, ideally as a bigger bullish running triangle pattern within higher degree wave (4).

Currently we are tracking final stages of a complex w-x-y rally into wave D that can cause another wave E slow down. So, once a triangle fully unfolds, be aware of a retest of the highs for wave (5) of a higher degree wave C/B.

The running triangle is a region of horizontal price movement, a consolidation of a prior move, and it is composed of “threes.” That means each of the A-B-C-D-E waves have three subwaves.

Daily Pivots: (S1) 0.9833; (P) 0.9852; (R1) 0.9873; More...

EUR/CHF's strong break of 0.9837 support argues that rebound from 0.9407 has completed. More importantly, corrective pattern from 1.0067 high is extending with another falling leg. Intraday bias is back on the downside for 0.9074, and possibly below. On the upside, though, break of 0.9889 minor resistance will turn intraday bias back to the upside for stronger rebound.

In the bigger picture, prior rejection by 55 week EMA (now at 1.1002) and 38.2% retracement of 1.1149 to 0.9407 at 1.0072 suggests that medium term outlook is staying bearish. That is, down trend from 1.2004 is not completed yet and is in favor to resume through 0.9407 at a later stage. However, decisive break of 1.0095 resistance will raise the chance of bullish trend reversal. Rise from 0.9407 should then target 1.0505 cluster resistance (2020 low at 1.0505, 61.8% retracement of 1.1149 to 0.9407 at 1.1484).

Daily Pivots: (S1) 0.8783; (P) 0.8801; (R1) 0.8823; More...

No change in EUR/GBP's outlook as range trading continues. On the upside, break of 0.8864 will target 0.8924 resistance first. Firm break there should resume larger rise from 0.8545 through 0.8977 high. However, decisive break of 0.8717 support will resume the decline from 0.8977 instead.

In the bigger picture, outlook remains rather mixed for now, except that price actions from 0.9267 (2022 high) are part of the long term range pattern from 0.9499 (2020 high). With 0.8720 support intact, rise from 0.8545 is in favor to continue through 0.8977. However, firm break of 0.8720 will argue that such rebound has completed, and open up deeper fall through this support level.