Sample Category Title

Pivot (invalidation): 1.0135

Our preference Long positions above 1.0135 with targets at 1.0170 & 1.0190 in extension.

Alternative scenario Below 1.0135 look for further downside with 1.0110 & 1.0085 as targets.

Comment The RSI is mixed to bullish.

Pivot (invalidation): 111.95

Our preference Short positions below 111.95 with targets at 111.65 & 111.50 in extension.

Alternative scenario Above 111.95 look for further upside with 112.05 & 112.15 as targets.

Comment The RSI advocates for further decline.

Pivot (invalidation): 1.3005

Our preference Short positions below 1.3005 with targets at 1.2975 & 1.2960 in extension.

Alternative scenario Above 1.3005 look for further upside with 1.3020 & 1.3035 as targets.

Comment As Long as the resistance at 1.3005 is not surpassed, the risk of the break below 1.2975 remains high.

Pivot (invalidation): 1.1240

Our preference Long positions above 1.1240 with targets at 1.1260 & 1.1275 in extension.

Alternative scenario Below 1.1240 look for further downside with 1.1225 & 1.1210 as targets.

Comment A support base at 1.1240 has formed and has allowed for a temporary stabilisation.

Dollar Index is close to the upper limit of its 6-months trading range. GBPUSD remains trapped between MA200 and 1.30. Oil has jumped at the start of the week by 3%: WTI - $66, Brent - $73.70.

USDX

The Dollar began trading on this week at around 97 for USDX, remaining near the high-end of its 6 months’ trading range. The American currency has repeatedly departed from these levels, but this year the corrective kickbacks became less pronounced. This can be viewed as a sign of the weakening pressure from the dollar sellers. The Breakthrough of the resistance area could be able to shift the scope of USDX buyers to a major round level of 100, and further to 103, to where the dollar climbed in early 2017.

GBPUSD

The British pound remains trapped between the support on a 200-day moving average (now at around 1.2970) and a resistance level at around 1.3000. In addition, it’s worth mentioning that the GBPUSD pair has fallen below the uptrend support, but the reverse to decline will only be confirmed after the pair goes under the previous local lows of 1.2970.

EURUSD

Following a Euro’s sale at the end of last week, this week began with a cautious growth of the single currency to to 1.1250 dollar. There will be not much economic releases at European session on Tuesday, thus volatility is expected to be lighter. Among important macroeconomic publications today, it is worth paying attention to the U.S. new home sales. The real estate market is a significant indicator of overall economic activity. Lower housing sales will be able to help the EURUSD repair some of its losses.

Brent

Oil has jumped at the start of the week by 3%% to $66 for WTI and 73.70 for Brent. The reason behind this spike was the announcement that US will no longer grant sanctions waivers to any country that is currently importing from Iran. In addition to the collapse of production in Venezuela and the rigid OPEC+ quotas, this solution will shift the balance of production and consumption further towards the deficit. This is very good and positive news for oil itself, but it is worth keeping an eye on the comments from OPEC and the presidential administration. The chances of OPEC + increasing the levels of quotas is now higher. Moreover Trump, in turn, has repeatedly put verbal pressure on oil quotes, as he sees cheaper Oil to be the source of economic growth.

• Rates: Eco data continuing to be bond supportive
  Risks for today's US and EMU eco releases are on the downside of expectations which could further support core bonds. Higher oil prices and the US Treasury's end-of-month supply operation hang on the other side of the balance. This week's key trading items are Q1 earnings (Facebook, Microsoft, Amazon.com,…) and Q1 US GDP release (Friday).
• Currencies: EUR/USD holding in the lower part of the 1.12/1.13 range
  Last week, EUR/USD failed to sustain north of 1.13 as EMU PMI's signalled little improvement in EMU economic activity yet. A higher oil price and a constructive risk sentiment are in theory a potential USD negative. However, it probably won't help the euro much as long as eco data doesn't improve in a convincing way.

The Sunrise Headlines

• US equity markets closed yesterday's session close to unchanged with changes varying between -0.18% (DJI) and +0.22% (Nasdaq). Asian equities are trading largely in green this morning with Chinese indices lagging behind.
• The US demands countries to no longer import any oil from Iran, ending waivers from US sanctions to some of Iran's largest customers, incl. China and India, to pressure the Iranian regime. A barrel crude (Brent) oil rose to $74.
• Herman Cain, US President Trump's top pick for one of the open seats on the Fed's board of governors, has asked for his name to be withdrawn from consideration. Trump's other top pic, Stephen Moore, is still in the running.
• US existing home sales shrank 4.9% (MoM) in March, more than expected (-3.8%) and sharply down from February's growth of 11.2%. The data follow on disappointing Housing Starts and Building Permits published on Friday.
• UK PM May Theresa May will resume talks with Labour and opposition leader Jeremy Corbyn today as Parliament returns from Easter break. Meanwhile, May faces renewed demands to stand down from Conservative hardliners.
• North Korean leader Kim Jong Un will soon visit Russian president Putin. It's the first meeting between the two countries' leaders since 2011, in a sign Kim is highlighting his willingness to strike relationships around the globe.
• Today's US eco calendar contains the Richmond Fed manufacturing Index for April and new home sales for March. The EMU calendar is empty. Q2 earnings season continues today with amongst others Twitter inc. and Procter & Gamble

Currencies: EUR/USD Holding In The Lower Part Of The 1.12/1.13 Range

EUR/USD stays in lower part of the 1.12/13 range

The euro was initially supported by a positive risk sentiment last week. Investors hoped that the better eco data from China could be a harbinger of a gradual rebound in the EMU. EMU PMI's on Thursday defeated this hope. The outlook for the EMU growth remains lacklustre. At the same time, US data including retail sales printed strong. EUR/USD tumbled back in the 1.12 big figure. In thin markets the euro regained modest ground on Friday and yesterday. Soft US homes sales and a sharp rise in the oil price were slightly USD negative. EUR/USD closed at 1.1257. USD/JPY showed no clear trend (close at 111.94).

Asian equities are trading mixed. China again underperforms as markets are still pondering recent comments from officials suggesting that the country might turn more selective when supporting the economy. High oil prices also remain an eye-catcher, too. The yen jumped (temporarily) higher this morning, possibly as Japanese investors are reducing risk positions ahead of the Golden week holidays. The Aussie and the kiwi dollar remain in de defensive as they fail to profit from higher oil prices. EUR/USD hovers in the mid 1.12 area.

Today, the April EC consumer confidence and US housing data will probably only be of second tier importance for (EUR/)USD trading. The focus will be on oil and on the corporate earnings. A higher oil price in theory is a USD negative, but for now, it is no big help for the euro. Markets will also keep a close eye at corporates' expectations. A constructive equity sentiment often helps the euro, but any sustained euro rebound will probably remain difficult if there is no convincing evidence of the EMU economy gradually leaving its (drawn-out) 'soft spot'. More sideways EUR/USD trading in the 1.12 big figure might be on the cards. In a ST/daily perspective, some further downward erosion in the 1.12 big figure might be on the cards, but we don't anticipate a sustained break below the 1.1177/1.12 support area.

Of late, EUR/GBP held a tight range in the 0.86 big figure. UK eco data were mixed and still fail to guide sterling trading as the Brexit stalemate persists. Today, Brexit headlines might resurface after the Easter recess has ended. However, for now there is no indication of an imminent break-through in the talks of PM May's conservative party and the labour opposition. The euro isn't really in good shape, but at the same time we seen no trigger for a sustained euro rebound. More technical trading in EUR/GBP might be on the cards.

EUR/USD dropped back in the 1.12 big figure as EMU PMI's signal no big rebound in EMU economy

GBPUSD tumbled over the previous four consecutive days, plunging below the medium-term ascending trend line and creating a short-term descending line after the pullback on the nine-month high of 1.3380 in the daily timeframe. Also, the pair declined beneath the key level of the 38.2% Fibonacci retracement level of the upleg from 1.2390 to 1.3380, around 1.3000, recording a fresh one-month low of 1.2975.

Regarding to the technical picture, the 20- and 40-simple moving averages (SMAs) posted a bearish crossover in the preceding sessions and the price is challenging the 200-SMA, which is acting as strong retracement barrier for the bulls. Both the RSI and the stochastic have been making efforts to turn higher, with the former reversing towards its 50 neutral mark and the latter completing a bullish cross between its %K and %D lines. Those attempts provide some optimism; however, they are not enough to support positive prospects.

A downside movement below the 200-SMA and the 1.2960 support could send prices towards the 50.0% Fibonacci mark of 1.2885 ahead of the 1.2770 hurdle, which overlaps with the 61.8% Fibonacci.

A strong rebound on 1.2960 and a climb above 1.3000 could shift the bearish bias back to bullish, enabling it to surpass the short-term descending line and the 20-SMA. The next resistance would then come from the 40-SMA currently at 1.3115 and the 23.6% Fibonacci of 1.3150. Slightly higher, the 1.3200 psychological level could provide some resistance to the bulls.

Briefly, cable has been developing in a near-term negative profile as it also slipped below the 1.3000 critical level over the last couple of days. More downside extensions are expected only if there is a fall below the 200-SMA. On the other hand, bullish actions would be faced above 20-SMA (1.3050).

ECB Executive Board Member Benoit Coeure said in a newspaper interview that policymakers expected "growth to return in the second half of the year". He told German daily Frankfurter Allgemeine Zeitung "there are no grounds for overly gloomy thoughts". However, he admitted for now "it is very uncertain how long and how strong the downturn will be."

On monetary policy, Coeure sees no argument for tiered deposit rate. He urged banks to focus on their own costs, rather than blaming ECB's negative rate for lower profits. Meanwhile, currently, markets are pricing in no rate cut until at least 2021. Coeure warned "we are not tied to such market expectations; they are an important input, but we are not led by them." He added market pricing are merely reflecting "an assessment of the downside risks which is different to that of the Governing Council".

General Trend:

• Nikkei weighed down by broker downgrade of Fast Retailing
• Shanghai Composite declines for 2nd straight session, markets continue to debate next RRR cut
• Shanghai Property index rises less than 1%, declined over 3.5% on Monday’s session
• Property index in Hong Kong declines due to catch-up selling
• Higher oil prices weigh on Chinese airlines
• China pork producer WH Group rises over 6% on outlook for domestic prices
• China PBOC skips OMO and drains liquidity for first time since late March
• China 10-yr bond yields extend gains amid focus on PBOC policy outlook, higher oil prices, Monday’s rise in US Treasury yields
• Analysts start to raise China growth forecasts after better March data
• Oil Futures extend gain amid focus on supplies and Iran
• Australian equities rise upon return from 2-day holiday, Energy sector out performs
• Australia Q1 CPI expected to remain below the RBA’s 2-3% target, data due on Wed
• Bank of Japan (BOJ) is due to meet April 24-25th
• US companies expected to report earnings on Tuesday include Hasbro, Harley Davidson, JetBlue, Coca-Cola, Lockheed Martin, Nucor, Procter & Gamble, PulteGroup, Polaris Industries, Sherwin Williams, State Street, Twitter, United Technologies, Verizon

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.2%
• PDN.AU Comments on market speculation: Currently has no intention to raise capital
• (NZ) New Zealand Mar Credit Card Spending M/M: -0.1% v +0.2% prior; Y/Y: 5.1% v 6.4% prior

Japan

• Nikkei 225 opened +0.1%
• NSANY Renault said to have made new attempt to integrate with Nissan; Nissan expected to reject offer and push for more equal capital relationship - Nikkei
• (JP) Japan Trade Min: No need to use national oil reserves after US decision on Iran oil sanction
• (JP) Japan Fin Min Aso: No comment on content of talks with Mnuchin; reiterates have been no talks on currency as parties agreed
• (JP) Bank of Japan (BOJ) Senior Official Maeda: Reiterates BOJ will ease policy further if needed, if momentum for hitting price target is threatened; ready to act including combining various means
• 0003.JP Guides FY19/20 Plans to increase foreign and domestic bond holdings
• (JP) Japan MoF sells ¥2.1T v ¥2.1T indicated in 0.10% (0.10% prior) 2-yr JGBs, avg yield: -0.152% v -0.175% prior, bid to cover 5.04x v 5.28x prior

Korea

• Kospi opened +0.1%
• (KR) South Korea Government: Overnight FX swap drop is a temporary trend; attributes it to repatriation of stock dividends
• 020560.KR Creditors planning KRW1.6T capital injection – Yonhap
• 005930.KR To ship back Galaxy foldable phones that were shipped to EU and US - Korean press

China/Hong Kong

• Hang Seng opened -0.6%; Shanghai Composite opened -0.1%
• (CN) China Central Financial and Economic Affairs Committee reiterates plan to increase financial support for real economy; to fine tune monetary policy on growth and prices
• (CN) According to some domestic Canton Fair exhibitors, China belt and road plan helping foreign firms and hurting mainland exporters – SCMP
• (CN) China to issue guidelines related to steel industry M&A - Chinese Press
• (CN) China PBoC Open Market Operation (OMO): Skips reverse repo operations for the second consecutive session; Net: CNY40B drain v CNY0B prior (first drain since late March)
• (CN) China PBoC sets yuan reference rate: 6.7082 v 6.7035 prior
• (CN) Fitch Report: Sees China Property sales will be at lower end of 5-10% forecast in Nov 2018
• 700.HK According to analysts, China's new requirement for mini and HTML5 games to go through regulatory approval before release may reduce overall game approvals and reduce usage of WeChat
• (CN) Certain shipments of Canada pork to China said to have been delayed due to paperwork issue - financial press
• (CN) China Ministry of Agriculture and Rural Affairs 2019-2028 outlook: see pork prices rising, grain production to remain stable - 2019 China Agricultural Outlook Conference
• (CN) China former Commerce Min: Expects imports to grow faster than exports - Chinese press

Other Asia

• (SG) Singapore Mar CPI M/M: -0.1% v +0.1%e; Y/Y: 0.6% v 0.7%e; CPI Core Y/Y: 1.4% v 1.7%e
• (PH) Philippines Central Bank suspends currency trading and bond auctions until impact of recent 6.1 magnitude earthquake is assessed

North America

• (IR) US Sec of State Pompeo: Trump administration will no longer grant exemptions on waivers for Iran oil sanctions; we are confident oil market to remain stable
• (MX) Mexico Foreign Ministry: Slowing flow of goods and transit of people at US border is detrimental for both economies and competitiveness of region

Europe

• (UK) 1922 Committee of Conservative MPs (back benchers) Chair Brady said to have prepared to tell PM May that she must step down by the end of June or her MPs will change the Tory party leadership rules to force her out - financial press
• (UK) US Pres Trump to visit United Kingdom in June - UK Press
• (FR) ECB's Coeure (France) Negative interest rates are not the biggest problem for the banking sector; Sector should focus on costs; growth will return in H2 this year, if we see solutions to the trade conflict - financial press

Levels as of 1:20 ET

• Nikkei 225, -0.1%, ASX 200 %, Hang Seng -0.1%; Shanghai Composite -0.4%; Kospi flat
• Equity Futures: S&P500 flat; Nasdaq100 +0.1%%, Dax -0.1%; FTSE100 +0.3%
• EUR 1.1262-1.1244; JPY 111.98-111.65 ; AUD 0.7153-0.7121 ;NZD 0.6688-0.6670
• Gold flat at $1,277/oz; Crude Oil +0.5% at $65.86/brl; Copper +0.3% at $2.913/lb

Market movers today

After a week of thin Easter trading, focus will be on the uptrend in oil prices (more below) and on news from the ongoing US-China trade talks; for more on our expectations of what a trade deal could bring market-wise, see Global Research - What a US-China trade deal will bring to the markets . The start of Japan's Golden Week will likely keep volumes thin in that region this week.

The oil market will stay in focus after the comments by President Trump yesterday that the US plans to end Iran sanction waivers by 2 May. Notably, attention will centre on whether other OPEC members will ensure adequate oil supplies after a further fall in Iran oil exports, as indeed suggested by Saudi Arabia yesterday.

On the data front, we have a rather quiet day with the only notable release being the euro-area consumer confidence for April. Later this week the Riksbank meets (Thursday) and next week brings Chinese PMI, a Fed meeting and the US jobs report.

Danish consumer confidence data is due today; see Scandi section p. 2 for details.

Selected market news

A continued uptick in global oil prices is setting the scene for markets following a week of thin Easter trading. Notably, over the weekend, the US administration announced that it would not renew waivers on sanctions on Iranian oil exports. This effectively means that a range of countries that have been allowed to take up oil from Iran, despite the US withdrawing from the Iranian nuclear deal in May last year, will no longer be allowed to do so starting from 2 May this year. While Saudi Arabia and the UAE reportedly aim to make up for a good deal of the 1.9 mb/d that Iran currently supplies, Brent crude oil rallied past USD74/bbl yesterday. Indeed, the US removal of waivers is just one of a string of recent supply concerns hitting the oil market. Adding to strains, Iran has threatened to close the Strait of Hormuz - a key gateway for Middle East oil to the rest of the world.

Risk sentiment has held up reasonably well so far in the wake of the sustained oil uptick, with major equity indices little changed over the Easter period. Trading has been mixed overnight in both the US and Asian sessions. Over the past few trading days, US 10Y yields have settled just above 2.55% while the German 10Y bund again fell below 0.025% after PMIs came out on the weak side of expectations in the euro zone (and the US) ahead of the Easter period; EUR/USD dropped below 1.13 as a result. We stress, however, that some key signs of stabilisation are visible in the euro-zone figures, as notably, the PMI 'new orders' rose for the first time since December 2017. Hence, we still hold the view that the euro-zone economy is bottoming out in Q2 and will regain some momentum in H2 19, with annual growth of 1.3% for 2019.