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Bundesbank President Jens Weidmann warned that German economy could slow sharply in 2019. Growth rate could eventually be lower than 1%. He pointed to IMF's new projections of just 0.8% for this year and noted that's entirely plausible. It's just half the rate of 1.6% Bundesbank projected back in December.

Weidmann also added, "Fiscal policy, as the minister (Finance Minister Olaf Scholz) said, is already expansionary in Germany and we estimate the impact of fiscal policy on GDP for this year to be between one quarter to one half percentage point."

The DAX index has posted sharp gains on Friday, continuing the upward movement which marked the past two sessions. Currently, the DAX is at 12,010, up 0.60% on the day. In economic news, there are no major German or eurozone events. The German wholesale price index remained steady in March, with a gain of 0.3%. Eurozone industrial production declined by 0.2%, above the estimate of -0.5%.

The DAX started the week with sharp losses, but reversed directions and has recouped most of these losses. Investor enthusiasm was not dampened by comments from Mario Draghi, after the ECB rate decision on Wednesday. Draghi acknowledged that eurozone economic data remains weak, particularly in the manufacturing sector. The economic outlook remains weak, with Draghi saying that “slower growth momentum is expected to extend into the current year”. At the same time, Draghi said that the likelihood of a recession remains low. On the inflation front, Draghi stated that interest rates will remain at current levels at least until the end of 2019 and possibly later.

The Aussie dollar advances strongly on Friday and looks for retest of Wed/Thu highs (0.7175/71), following bumpy ride in past two days when the pair advanced 0.66% and the fell in the same percentage the next day.

Bulls stayed short of key barriers at 0.7183/96 (Fibo 61.8% of 0.7295/0.7003 / 200SMA) despite bullish techs.

Repeated rejection ahead of these barriers would soften the tone and risk fresh weakness, as daily cloud narrows and will twist next Friday that could be magnetic for the price.

Sustained break above 0.7200 zone would signal continuation of recovery from 0.7000 base and expose targets at 0.7226 (Fibo 76.4%) and high of 6 Feb before 1.8% daily fall).

Broken 100SMA offers initial support at 0.7141, guarding more significant 0.7120 support (base of three-day congestion, reinforced by 55SMA).

Res: 0.7175, 0.7183, 0.7196, 0.7226
Sup: 0.7141, 0.7120, 0.7110, 0.7095

EURAUD has been moving sideways in the short-term and long-term timeframes. Over the last two-months, the price has been developing between the 1.6120 resistance level and the 1.5720 support barrier, trading below the 20- and 40-simple moving averages (SMAs) in the daily chart. The market could maintain its consolidation mode as the RSI and the MACD are holding near their neutral levels with weak momentum.

An extension to the upside and above the moving averages could meet the next resistance level of 1.6120, taken from the latest highs, while even higher, the upside rally could send the price towards the 1.6350 hurdle, registered on October 2018.

However, if the pair weakens, it could slip until the 1.5720 key level, before shifting the bias back to bearish and heading towards 1.5670. Even lower, the 1.5340 level could attract greater attention as any leg lower could worsen the market’s bearish outlook, opening the way towards the 1.5270 support area.

Summarizing, the outlook remains neutral and investors should wait an exit from the narrow range of 1.5720 – 1-6120 in the short-term before placing orders.

AUDNZD made a nice and strong recovery in the last 14 days, from the 1.028 level, and above the 1.045 region. This recovery is a sign, that a higher degree wave B correction is completed, and that final wave C is in play, with its five-wave structure, towards the 1.085/1.092 region. That said, be aware of temporary pullbacks during this uptrend.

AUDNZD, Daily

Notes/Observations

• Better China data in session putting some impetus towards risk appetite
• China Mar trade surplus larger than expectations as exports beat consensus
• China Mar New Yuan Loans hit highest level since Feb 2017

Asia:

• Monetary Authority of Singapore (MAS) semi-annual monetary policy statement maintained a steady policy (as expected) for its 1st pause in 3 meetings in the current tightening cycle
• Singapore Q1 advance GDP data saw its slowest annual pace in 3 years (Q/Q: 2.0% v 2.2%e; Y/Y: 1.3% v 1.4%e)
• RBA Financial Stability Review: Domestic economic conditions remain broadly supportive of financial stability

Europe:

• ECB policymakers said to be skeptical about tiered deposit rate but leaning towards offering negative rate on TLTRO to banks that achieve lending targets
• UK Labour Party spokesperson: PM May and Leader Corbyn held short meeting this on Thursday; agreed to continue talks to find compromise plan
• BOE Gov Carney: lack of a Brexit deal is a sign of global issues, Risk of no deal Brexit lower after Wed's extension

Americas:

• US Fed Chair Powell said to reiterate 'rates in right place'
• Fed's Clarida (moderate, voter): Fed did not see elevated recession risk; prospect for an upturn in global growth later in 2019
• Herman Cain expected to withdraw his name from Fed consideration amid opposition to his nomination

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.03% at 387.30, FTSE +0.42% at 7,449.25, DAX +0.37% at 11,979.57, CAC-40 +0.14% at 5,493.55, IBEX-35 +0.10% at 9,454.60, FTSE MIB +0.31% at 21,752.50, SMI -0.29% at 9,521.60, S&P 500 Futures +0.40%]
• Market Focal Points/Key Themes: European Indices trade mostly higher buoyed by stronger Chinese trade data, tracking higher Asian Indices and stronger US futures. On the corporate front shares of Plus 500 declines sharply after a profit warning falling by over 40% at one point before recovering to be down 25% at present, Revenues fell 80% on the year following subdued financial markets. Fagron also declines after Q1 Rev slightly missed forecasts. Elsewhere Games Workshop gains following a trading update, while Swedol gains on March sales metrics. In other news Pets at Home and Searbird Exploration decline after a placing, with Entertainment One also declining after a placing to fund the acquisition of Audio Network Limited. Looking ahead sees the major US banks kick off earnings season with JP Morgan, PNC Bank and Well Fargo among the notable names reporting.

Equities

• Consumer discretionary: Entertainment One [ETO.UK] -2% (placement), Pets at Home [PETS.UK] -11.5% (placement), Games Workshop [GAW.UK] +10.5% (trading update), Mitie Group [MTO.UK] -1% (CMA notes on acquisition)
• Consumer staples: Carl Zeiss Meditec [AFX.DE] +3.5% (earnings)
• Financials: Plus500 [PLUS.UK] -25% (trading update)
• Technology: Software AG [SOW.DE] +0.5% (prelim earnings), Ekinops [EKI.FR] +5% (discussions between Ekinops and Nokia on possible acquisition of Alcatel Submarine Networks have ended)
• Materials: Covestro [1COV.DE] +0.5% (AGM)

Speakers

• Germany Economic Ministry Monthly Report: Indicators point to subdued exports in coming months' considerable risks remain due to Brexit and trade conflicts. Weakness in German manufacturing was being offset by continued strength in domestic demand
• Germany Economic Ministry said to cut 2019 GDP growth from 1.0% to 0.5% and saw 2020 growth at 1.5%
• Sweden Central Bank (Riksbank) Dep Gov Floden: Global uncertainty had eased a bit but concerned about Germany
• China Customs Administration spokesperson Li Kuiwen: Expects China's exports and imports to show 'mild' growth in Q2; China's improved economy supports trade

Currencies/Fixed Income

• Better China data in session putting some impetus towards risk appetite and helps to weaken the USD and JPY currencies.
• EUR/USD at multi-week highs and back above the 1.13 level in quiet trading.
• USD/JPY approaching the 112 area on reversal of safe-haven flows following Chinese data.
• Little expected on the Brexit front as UK Parliament was on recess until April 22nd GBP/USD slightly higher by 0.2% at 1.3070

Economic Data

• (NL) Netherlands Feb Trade Balance: €5.1B v €2.9B prior
• (DE) Germany Mar Wholesale Price Imdex M/M: 0.3% v 0.3% prior; Y/Y: 1.8% v 1.6% prior
• (NO) Norway Q1 House Price Index Q/Q: 0.3% v 0.2% prior
• (CN) China Mar Trade Balance: $32.6B v $5.7Be; Exports Y/Y: 14.2% v 6.5%; Imports Y/Y: -7.6% v +0.2%e
• (CN) China Mar Trade Balance (CNY-denominated): 221.2B v 76.6Be; Exports Y/Y: 21.3% v 6.3%e; Imports Y/Y: -1.8% v +2.6%e
• (ES) Spain Mar Final CPI M/M: 0.4% v 0.4%e; Y/Y: 1.3% v 1.3%e
• (ES) Spain Mar Final CPI EU Harmonized M/M: 1.4% v 1.4%e; Y/Y: 1.3% v 1.3%e
• (ES) Spain CPI Core M/M: 0.5% v 0.1% prior; Y/Y: 0.7% v 0.7%e
• (ES) Spain Feb House transactions Y/Y: +5.3% v -0.2% prior
• (CN) Weekly Shanghai copper inventories (SHFE): 245.2K v 257.3K prior
• (RU) Russia Narrow Money Supply w/e Apr 5th (RUB): 10.16T v 10.10T prior
• (CZ) Czech Feb Current Account Balance (CZK): 26.7B v 26.5Be
• (CN) China Mar M2 Money Supply Y/Y: 8.6% v 8.2%e; M1 Money Supply Y/Y: 4.6% v 3.0%e; M0 Money Supply Y/Y: 3.1% v 3.5%e
• (CN) China Mar New Yuan Loans (CNY): 1.690T v 1.225Te (strongest since Jun 2016)
• (CN) China Mar Aggregate Financing (CNY): 2.86T v 1.900Te
• (EU) Euro Zone Feb Industrial Production M/M: -0.2% v -0.5%e; Y/Y: -0.3% v -0.9%e

Fixed Income Issuance

• (IN) India sold total INR170B vs. INR170B in 2024, 2029, 2035 and 2049 bonds

Looking Ahead

• (US) IMF/World Bank spring meetings begins in Washington
• JP Morgan and Wells Fargo kick off US corporate earnings season
• 06:00 (UK) DMO to sell €4.0B in 1-month, 3-month and 6-month bills £0.5B, £1.5B and £2.0B respectively)
• 06:30 (IS) Iceland to sell 3.8% Apr 2021 inflation-linked RIKS Bonds
• 06:45 (US) Daily Libor Fixing
• 07:30 (IN) India Weekly Forex Reserves w/e Apr 5th: No est v $411.9B prior
• 08:00 (PL) Poland Feb Current Account Balance: -€0.4Be v €2.3B prior; Trade Balance: -0.3Be v +€0.3B prior; Exports: €18.0Be v €18.5B prior; Imports: €18.1Be v €18.2B prior
• 08:00 (IS) Iceland Mar Unemployment Rate: No est v 3.1% prior
• 08:00 (BR) Brazil Feb IBGE Service Sector Volume Y/Y: 3.8%e v 2.1% prior
• 08:00 (IN) India Mar CPI Y/Y: 2.8%e v 2.6% prior
• 08:00 (IN) India Feb Industrial Production Y/Y: 2.0%e v 1.7% prior
• 08:00 (IN) India announces upcoming bill issuance (held on Wed)
• 08:30 (US) Mar Import Price Index M/M: 0.4%e v 0.6% prior; Y/Y: -0.6%e v -1.3% prior; Import Price Index (ex-petroleum) M/M: -0.1%e v +0.1% prior
• 08:30 (US) Mar Export Price Index M/M: 0.2%e v 0.6% prior; Y/Y: No est v 0.3% prior
• 08:30 (CA) Canada Mar Teranet/National Bank HPI M/M: No est v -0.4% prior; Y/Y: No est v 1.9% prior House Price Index: No est v 223.00 prior
• 08:45 (BE) ECB's Praet (Belgium, chief economist)
• 10:00 (US) Apr Preliminary University of Michigan Confidence: 98.1e v 98.4 prior
• 11:00 (CO) Colombia Feb Industrial Production Y/Y: 2.6%e v % prior; Retail Sales Y/Y: 4.3%e v 3.0% prior
• 11:00 (EU) Potential sovereign ratings after European close - S&P on Germany
• 13:00 (US) Weekly Baker Hughes Rig Count data - (PE) Peru Feb Trade balance: No est v $0.3B prior

Extension of Thursday's strong rally (0.58%) hit five-week high and approaches key barrier at 112.02 (200WMA) and nearby pivots at 112.19 (Fibo 76.4% of 114.54/104.59 / upper 20-d Bollinger band).

Thursday's close above 200SMA was strong bullish signal for attack at 112.02/19 pivots, violation of which would open way for 113+ gains.

The action remains underpinned by ascending massive daily cloud and on track for the third straight bullish weekly close (this week's candle has a long tail) and the second close above weekly cloud top that adds to bullish outlook.

Caution on possible hesitation at 200WMA as daily 14-d momentum is cresting.

Corrective dips would offer better opportunities for renewed longs, while broken 200SMA (111.50) holds.

Res: 112.02, 112.19, 112.60, 113.00
Sup: 111.82, 111.50, 111.21, 111.06

The euro currency has performed a bullish breakout against the US dollar during the European trading session, with price now rising above the 1.1290 level. The EURUSD pair is likely to target the 1.1330 level now that the bullish technical breakout has occurred. It is worth noting that medium-term sellers may also be looking to sell the EURUSD pair from the 1.1330 resistance area.

The EURUSD pair is strongly bullish while trading above the 1.1290 level, key technical resistance is found at the 1.1330 and 1.1350 levels.

If the EURUSD pair trades below 1.1290 level, key intraday support is found at the 1.1250 and 1.1216 support levels.

The British pound continues to struggle below the 1.3100 level against the US dollar as traders continue to suffer from Brexit fatigue. The GBPUSD pair remains technically weak while trading below trendline support and may weaken below the 1.3000 level. The 1.2940 level currently offers the strongest form of technical support below the psychological 1.3000 support level.

The GBPUSD pair is only bullish while trading above the 1.3100 level, key intraday resistance remains at the 1.3125 and 1.3265 levels.

If the GBPUSD pair trades under the 1.3070 level, key intraday support is found at the 1.3000 and 1.2940 levels.

EURGBP jumped above the 50-day simple moving average (SMA) and into the Ichimoku cloud on Friday for the first time since the start of the year, raising hopes for further improvement. The momentum indicators comply with this view as long as the RSI keeps increasing speed to remain above its 50 neutral mark and the MACD holds in positive territory.

Still, for a longer-lasting rally in the near term, the pair needs to break its range-bound trading within the 0.8470-0.8726 area, while a close above the 200-day SMA currently at 0.8818 and the upper surface of the cloud may encourage more aggressive buying interest. Beyond the latter, a taller wall stands around 0.8940, a key support and resistance area during 2018.

A failure to hold above the 50-day SMA would shift the focus back to the 0.8540-0.8470 region, where the market bottomed lately. Should the pair drop lower, marking another lower low and a lower high at 0.8726 in the January downtrend, then the sell-off may easily continue towards the 0.84 and 0.83 psychological levels, making bears more dominant in the bigger picture.

In brief, EURGBP is still trapped within a range with some short-term bullish bias but the downleg from the 0.9110 top keeps the longer-term outlook bearish.