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Daily Pivots: (S1) 1.1119; (P) 1.1174; (R1) 1.1206; More.....

EUR/USD's decline continues and reaches as low as 1.1140 so far. The break of 1.1176 key support now suggests resumption of whole down trend from 1.2555. Intraday bias stays on the downside for 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. Break will target 161.8% projection at 1.0895. On the upside, above 1.1192 minor resistance will turn bias neutral and bring consolidations first. But recovery should be limited well below 1.1324 resistance to bring fall resumption.

In the bigger picture, down trend from 1.2555 is now resuming with break of 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Medium term also remains with EUR/USD staying well below falling 55 week EMA. Next downside target will be 78.6% retracement at 1.0813. Sustained break there will pave the way to retest 1.0339. On the downside, break of 1.1448 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

It appears that the global economy is now running at two different speed. US is maintaining firm momentum despite all the uncertainties and slowdown elsewhere. Strong corporate earnings provide evidence on underlying resilience. While global central banks are turning cautious or even dovish, there is little pressure for Fed to reverse course yet.

Dollar and Yen are the two strongest one for the week. US assets are given a strong boost on flight-to-quality flows. US stocks digested some of recent gains overnight, but S&P 500 and NASDAQ remained closed to record highs. US 10-year yield dived notably by -0.048 to 2.522 after being rejected by 2.6 handle just days again. This indicates strong demand for US treasuries. Dollar also surge through key resistance level against Euro.

On the other hand, Yen is some what boosted by flight-to-safety flows. In particular, German 10-year yield turned negative again for the first time since April 12. US yields also tumbled. Even though Asian stocks remain resilient, fall in global yields is enough to give Yen a race with Dollar as the strongest.

Technically, EUR/USD's break of 1.1176 key support finally indicates resumption of medium term down trend from 1.2555. USD/CAD's break of 1.3467 resistance now puts 1.3664 high into focus. Break will resume medium term up trend from 1.2061. AUD/USD is pressing 0.7003 key support and break will resume fall from 0.7295 towards 0.6722 flash crash low. No clear direction is seen in USD/JPY yet as it spiked through 112.13 briefly but pulled back almost immediately.

In Asia, Nikkei closed up 0.48%. Hong Kong HSI is down -0.54%. China Shanghai SSE is down -2.23%. Singapore Strait Times is down -0.17%. Japan 10-year JGB yield is up 0.0041 at -0.032. Overnight, DOW dropped -0.22%. S&P 500 dropped -0.22%. NASDAQ dropped -0.23%. 10-year yield dropped -0.0048 to 2.522.

BoJ pledges to keep interest rates low at least through Spring 2020

BoJ left monetary policy unchanged today as widely expected. More importantly, the central bank now provides much clearer forward guidance. It's noted that "the Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, at least through around spring 2020". That's based on "uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike."

Under the yield curve control framework, short term interest rate is kept at -0.1%. BoJ will continue to purchase JGBs to keep 10-year yield at around 0%, with some flexibility. Annual pace of monetary base expansion is kept at JPY 80T. Y Harada dissented again, proposing to tie forward guidance to price stability target. G Kataoka also dissented too, urging BOJ to commit to take additional easing measures if there is downward revision in medium- to long-term inflation expectations. The vote was by 7-2.

On the economy, BoJ said it's likely to "continue on a moderate expanding trend" despite the impact from overseas slowdown. CPI continued to show "relatively weak developments", comparing to labor market tightening. But it expects CPI to "gradually" increase towards 2% target. Though, there are "high uncertainties regarding the outlook for economic activity and prices including developments in overseas economies".

BoC dropped tightening bias, slashed GDP forecasts

Yesterday, BoC kept overnight rate unchanged at 1.75% and drops tightening bias. The accompanying statement concluded by saying that "an accommodative policy interest rate continues to be warranted". The "appropriate degree" of accommodation will be evaluated as new data come in . In particular, BoC will monitor "developments in household spending, oil markets, and global trade policy". The sentence regarding " future rate increases" was omitted.

Growth forecasts for 2019 was sharply revised lower to 1.2%, down from January projection of 1.7%. 2020 growth forecast was revised slightly lower from 2.1% to 2.0%. Inflation is expected to remain around 2% through 2020 and 2021.

Suggested readings:

• BoC Poloz press conference live stream
• (BOC) Bank of Canada maintains overnight rate target at 1 ¾ per cent
• BOC Erases Rate Hike Possibility in Near- to Medium- Term
• BOC Drops its Hawkish Bias, USD/CAD Breaks Above 1.3500
• Bank of Canada Rate Hold Comes with a Growth Downgrade
• Bank of Canada shifts to neutral bias; takes an axe to 2019 growth forecast

NIESR expects no BoE hike until August 2020

UK National Institute of Economic and Social Research (NIESR) pushed back their BoE rate expectation by a year in the new forecasts. NIESR economist Garry Young said "now we expect the first increase in Bank Rate to be next August rather than this August."

NIESR also noted that Brexit related uncertainty "has led to investment plans being deferred and increased stockbuilding." Under the main scenario of "soft Brexit", GDP growth will continue at around 1.5% in both 2019 and 2020. Unemployment rate will stay at around 4%. CPI will remain at around 2%.

Regarding different Brexit scenarios, growth will be similar between staying in EU and "soft Brexit". However, growth will be weaker is UK is to stay in the customs union, and even worse in a no-deal Brexit.

On the data front

US durable goods orders and jobless claims will be the major focuses of the day. UK will release CBI trends total orders.

EUR/USD Daily Outlook

Daily Pivots: (S1) 1.1119; (P) 1.1174; (R1) 1.1206; More.....

EUR/USD's decline continues and reaches as low as 1.1140 so far. The break of 1.1176 key support now suggests resumption of whole down trend from 1.2555. Intraday bias stays on the downside for 100% projection of 1.1448 to 1.1183 from 1.1324 at 1.1059. Break will target 161.8% projection at 1.0895. On the upside, above 1.1192 minor resistance will turn bias neutral and bring consolidations first. But recovery should be limited well below 1.1324 resistance to bring fall resumption.

In the bigger picture, down trend from 1.2555 is now resuming with break of 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Medium term also remains with EUR/USD staying well below falling 55 week EMA. Next downside target will be 78.6% retracement at 1.0813. Sustained break there will pave the way to retest 1.0339. On the downside, break of 1.1448 resistance is needed to be the first sign of medium term bottoming. Otherwise, outlook will stay bearish in case of rebound.

Economic Indicators Update

USDJPY had a successful jump above the 112.00 handle on Wednesday, flirting with a fresh four-month high of 112.40. The price rebounded on the mid-level of the Bollinger Band (20-SMA) and hit the upper Boundary, which seems to be a real struggle for the bulls. Technically, the price could lose some ground in the short-term as the RSI is sloping down in the positive territory, while the MACD remains below its trigger line.

If the price declines and drops beneath the 20- and 40-simple moving averages (SMAs), the next immediate support to watch is the 110.85 barrier, which coincides with the lower Bollinger Band. Further losses could send prices slightly lower until the 23.6% Fibonacci of the upleg from 104.64 to 112.40, near 110.60.

Alternatively, another jump above yesterday’s high could open the door for the 113.70 resistance barrier, taken from peak on December 2018, ahead of the top on November 2018 around 114.20.

In brief, USDJPY is pointing up over the past three months, framing a positive profile. A rally above 112.40 would extend the upward trend off the ten-month low of 104.64, making the outlook even more bullish.

The euro currency has fallen to a fresh 2019 trading low against the US dollar, hitting 1.1135, as the greenback continues to surge higher across the board. The technical picture for the EURUSD pair is increasingly bearish, with price now trading below the neckline of the head shoulders pattern. The next major downside target for EURUSD sellers is likely to be the 1.1100 support level.

The EURUSD pair is heavily bearish while trading below the 1.1175 level, key technical support is found at the 1.1135 and 1.1100 levels.

If the EURUSD pair trades above 1.1175 level, key intraday resistance is found at the 1.1216 and 1.1230 levels.

Bitcoin is staging a strong technical correction lower on Thursday after finding interim technical resistance from the $5,620 level earlier this week. The Ichimoku indicator on the daily time frame is still showing that the $,5260 level is major weekly support for the BTCUSD pair. The Relative Strength Index and the Stochastic indicator on the daily time frame are both still trading in overbought territory.

The BTCUSD pair is only bullish while trading above the $5,260 level, key intraday resistance is found at the $5,620 and $5,700 levels.

If the BTCUSD pair trades under the $5,260 level, sellers may test towards the $5,200 and $5,080 support levels.

The British pound has fallen to a new monthly trading low against the US dollar as the bearish head and shoulders pattern break is increasing technical selling on the pair. The 1.2880 level is critical support below the 1.2900 level, with the 1.2840 level acting as extended intraday support. GBPUSD bulls need to move price above the 1.2960 level to negate immediate bear pressure.

The GBPUSD pair is heavily bearish while trading below the 1.2960 level, key support is found at the 1.2880 and 1.2840 levels.

If the GBPUSD pair trades above 1.2960 level, key intraday resistance is found at the 1.2975 and 1.3000 levels.

The Canadian dollar declined after the central bank announced its interest rates decision. As expected, the bank left interest rates unchanged at the 1.75% level. This was the fourth straight month the bank has left rates unchanged. In the monetary policy statement, the bank said that it expected the global economy to pick up in 2019 by an average of 3.75%. Growth in Canada is expected to pick up in the second quarter whereas the housing market is expected to stabilize. Consumption is predicted to increase over the same period. The bank expects the Canadian economy to grow by 1.2% this year and 2% in 2020.

The price of crude oil remained near yearly highs after the EIA released crude oil inventories for the past week. The data showed that the inventories rose by 5.4 million barrels, which was higher than the expected 1.25 million barrels. Previously, the American Petroleum Institute (API) said that the inventories rose by 6.9 million barrels. Investors are still concerned about the Iran sanctions and how OPEC will react.

The Japanese yen gained against the USD after the Bank of Japan (BOJ) delivered its interest rates decision. The bank left interest rates unchanged at minus 0.1% as expected. It will also continue to purchase more Japanese Government Bonds (JGB) so that the yield on the 10-year notes remain around zero per cent. The bank also guided that the current interest rates will be maintained until at least ‘spring 2020’. The bank is facing the challenge of slow growth and extremely low inflation rates. In fact, recent data revealed that the country’s exports had the fourth straight month of decline while consumer sentiment declined to the lowest level in three years.

EUR/USD

The EUR/USD pair declined as investors continued to worry about European growth. This is after Germany’s survey data showed signs of more weakness. In the US, the earnings season showed that the economy is still doing well. The pair reached a low of 1.1140, which was the lowest level since June last year. On the four-hour chart, this price is below the 50-day and 25-day moving averages. The pair is also along the lower line of the Bollinger Bands while the momentum indicator has fallen. Today, the pair could continue the downward trend to reach the 1.1140 level.

USD/JPY

The USD/JPY pair declined sharply before and after the BOJ delivered its interest rates decision. The pair declined from a high of 112.40 to an intraday low of 111.83. On the hourly chart, the pair is trading along the middle line of the Bollinger Bands. The Bears Power has weakened slightly while the RSI is trading at the 50s level. Today, the pair could decline to test the important support level of 111.75.

USD/CAD

The USD/CAD pair rose to an intraday high of 1.3522, which is the highest level since January. The pair broke the important resistance of 1.3465. On the four-hour chart, the pair is currently trading along the upper line of the Bollinger Bands and above the Envelopes indicator. The Stochastics indicator has fallen from the overbought level of 80. There is a likelihood that the pair will retest the support of 1.3465 before resuming the upward trend.

UK National Institute of Economic and Social Research (NIESR) pushed back their BoE rate expectation by a year in the new forecasts. NIESR economist Garry Young said "now we expect the first increase in Bank Rate to be next August rather than this August."

NIESR also noted that Brexit related uncertainty "has led to investment plans being deferred and increased stockbuilding." Under the main scenario of "soft Brexit", GDP growth will continue at around 1.5% in both 2019 and 2020. Unemployment rate will stay at around 4%. CPI will remain at around 2%.

Regarding different Brexit scenarios, growth will be similar between staying in EU and "soft Brexit". However, growth will be weaker is UK is to stay in the customs union, and even worse in a no-deal Brexit.

Press release here.

"Prospects for the UK Economy" details.

BoJ left monetary policy unchanged today as widely expected. More importantly, the central bank now provides much clearer forward guidance. It's noted that "the Bank intends to maintain the current extremely low levels of short- and long-term interest rates for an extended period of time, at least through around Spring 2020". That's based on "uncertainties regarding economic activity and prices including developments in overseas economies and the effects of the scheduled consumption tax hike."

Under the yield curve control framework, short term interest rate is kept at -0.1%. BoJ will continue to purchase JGBs to keep 10-year yield at around 0%, with some flexibility. Annual pace of monetary base expansion is kept at JPY 80T. Y Harada dissented again, proposing to tie forward guidance to price stability target. G Kataoka also dissented too, urging BOJ to commit to take additional easing measures if there is downward revision in medium- to long-term inflation expectations. The vote was by 7-2.

On the economy, BoJ said it's likely to "continue on a moderate expanding trend" despite the impact from overseas slowdown. CPI continued to show "relatively weak developments", comparing to labor market tightening. But it expects CPI to "gradually" increase towards 2% target. Though, there are "high uncertainties regarding the outlook for economic activity and prices
including developments in overseas economies".

Full statement here.

General Trend:

• Chinese markets decline as energy, materials, financial and property shares weaken
• Large Chinese steelmaker Baoshan Iron & Steel declines on profit drop
• Japanese equity market supported by chip-related companies; Brokers decline ahead of earnings
• Chipmaker Hynix rises despite weaker Q1 earnings, sees price declines slowing and affirmed shipment forecast
• Hynix share price gains support Asian chipmakers
• Kia Motors declines on revenue miss, sees H2 rebound in China
• UMC rises over 9% in Taiwan on buyback
• Facebook rises over 7% in afterhours trading on better results
• Korean Won (KRW) and bond yields decline on surprise GDP contraction
• AUD/JPY remains heavy after weaker Aussie Q1 CPI, May RBA meeting in focus
• PBOC continues to skip OMOs and drain liquidity amid RRR debate
• China PBoC attempts to clarify policy stance, gov't bond yields decline
• Nintendo expected to report earnings after Nikkei close
• Chinese Q1 earnings starting to pickup
• Japan Fin Min Aso is expected to discuss forex issues with US Treasury Sec Mnuchin this week, Aso is expected to travel to the US on April 25th (Thursday)
• Japan’s Golden Week holiday is approaching. Japan's exchanges are due to be closed between April 27 (Saturday) to May 6th (Monday)
• US companies expected to report on Thursday morning include Bristol-Myers, Cleveland Cliffs, Comcast, Freeport McMoran Copper, Hess, Hershey, International Paper, Southwest Airlines, 3M, Altria, UPS, Valero, Waste Management, Xerox

Headlines/Economic Data

Australia/New Zealand

• ASX 200 closed for holiday
• (AU) China said to maintain Australia coal 'go-slow' until after elections - US financial press

Japan

• Nikkei 225 opened -0.1%
• (JP) BOJ LEAVES INTEREST RATE ON EXCESS RESERVES (IOER) UNCHANGED AT -0.10%; AS EXPECTED; adjusts forward guidance: to keep extremely low rates at least through around Spring 2020, will consider introduction of ETF lending facility
• (JP) BOJ Quarterly Outlook for Economic Activity and Prices: Cuts GDP and core CPI outlooks, initiates FY21/22 guidance
• (JP) Japan PM Abe calling for deeper cooperation in the economy and defense during summit with Italy PM Conte - Nikkei
• 7201.JP Cuts FY18/19 Net ¥319B; Op ¥318B; Rev ¥11.57T (prior Net ¥410.0B; Op ¥450.0B; Rev ¥11.6T); cites adverse Q4 operating environment
• 4217.JP Hitachi Ltd to start taking acquisition bids for Hitachi Chemical in May; the unit could fetch ¥600-700Be – Nikkei
• (JP) Japan Chief Cabinet Sec Suga to visit the US from May 9-12th

Korea

• Kospi opened -0.2%
• (KR) SOUTH KOREA Q1 PRELIMINARY GDP Q/Q: -0.3% V 0.3%E (weakest since Q4 2008); Y/Y: 1.8% V 2.5%E; to host emergency meeting on GDP report
• (KR) South Korea Fin Min Hong: Expect Korea GDP recover Q2 and onwards on fiscal spending; H2 to be stronger than H1; will still try to reach growth target (2.5%)
• (KR) North Korea leader Kim has replaced Kim Yong Chol, blaming him for failed summit with US in Vietnam – Nikkei
• 000660.KR Reports Q1 (KRW) Net 1.1T v 1.1Te, Op 1.37T v 1.5Te; Rev 6.77T v 6.5Te
• (KR) Bank of Korea (BOK) Official: Latest BOK forecast downgrade reflected GDP, no need to be pessimistic on economy
• (KR) FX dealers suspect South Korea regulators taking smoothing operations to curb Won's weakness

China/Hong Kong

• Hang Seng opened -0.5%; Shanghai Composite opened -0.3%
• (CN) CHINA PBOC: WILL SET UP POLICY FRAMEWORK TO IMPLEMENT RELATIVELY LOW RRR FOR SMALL AND MEDIUM BANKS; WILL USE FUNDS RELEASED FROM LOWER RRR FOR SMALL AND MEDIUM BANKS TO SUPPORT PRIVATE AND SMALL COMPANIES - Chinese press
• (CN) China National Bureau of Stats (NBS) Chief Ning: Rising pork prices can be controlled; Exports to face risks from downward global demand
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the 4th consecutive session (used TMLF yesterday); Net: CNY80B drain v nil prior
• (CN) China PBOC Deputy Gov Liu Guoqiang: Reiterates prudent monetary policy is overall appropriate, neither tight nor loose; policy stance has not changed
• (CN) China PBOC thought to pause in RRR cuts, better GDP has reduced urgency for action - financial press
• (CN) China PBoC sets yuan reference rate: 6.7307 v 6.7205 prior
• (CN) China Premier Li: Reiterates that domestic economy faces downward pressure (overnight)
• (CN) China Mar Swift Global Payments CNY: 1.9% v 1.9% prior
• (CN) China Fin Min Liu: China must balance finance access and debt sustainability
• (CN) China PBOC Gov Yi Gang: Will keep building open market finance systems for belt and road initiative (BRI)
• (CN) Former China PBOC adviser Li: Economic recovery momentum basically stable; will have to wait and see if another RRR cut is needed

Other Asia

• (PH) Philippine govt expected to block bidders from China from the country's largest shipyard, Subic Bay, due to national security concerns - Nikkei

North America

• (US) DOE CRUDE: +5.5M V +0.5ME; GASOLINE: -2.1M V -1ME; DISTILLATE: -0.7M V -1ME
• (IR) Iran Foreign Min Zarif: US Navy ships can pass through Strait of Hormuz; Iran is committed to freedom of navigation
• GOOG Subsidiary, Wing, first to be awarded FAA certification to begin drone deliveries in the US – press
• (CN) US official: Confident China will be able to find alternative suppliers to smooth transition from Iran oil; also working with South Korea to ensure supply for petrochemical companies, confident US oil quality issues can be resolved

Europe

• CBK.DE Deutsche Bank and Commerzbank not likely to announce intention to merge this week, notes resistance from parties including investors and unions - US financial press

Levels as of 1:20 ET

• Nikkei 225, +0.5%, ASX 200 closed, Hang Seng -0.1%; Shanghai Composite -0.4%; Kospi -0.5%
• Equity Futures: S&P500 0.1%; Nasdaq100 +0.3%, Dax +0.2%; FTSE100 +0.3%
• EUR 1.1162-1.1144 ; JPY 112.24-111.84 ; AUD 0.7024-0.7003 ;NZD 0.6608-0.6584
• Gold -0.1% at $1,277/oz; Crude Oil -0.2% at $65.73/brl; Copper +0.1% at $2.912/lb