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Entering into US session, Euro is so far the strongest one for today, followed by Yen and the Sterling. On the other hand, Dollar, Australian and New Zealand are the weakest. But overall, the forex markets are generally in consolidative mode, without a committed direction. Stock markets in Asia and Europe are also mixed.

Improvements in Eurozone Sentix Investor Confidence seems to be taken well by traders. But the dark spot is that growth engine Germany lags far behind. There is no news on any kind of breakthrough regarding Brexit. It's generally expected that EU won't reject another extension, but would likely grant a long one. Economic calendar is relatively light today and tomorrow. Wednesday will be the key with ECB and FOMC minutes featured.

In Europe, currently:

• FTSE is up 0.11%.
• DAX is down -0.26%.
• CAC is up 0.12%.
• German 10-year yield is down -0.0073 at 0.003, still positive.

Earlier in Asia:

• Nikkei dropped -0.21%.
• Hong Kong HSI rose 0.47%.
• China Shanghai SSE dropped -0.05%.
• Singapore Strait Times dropped -0.22%.
• Japan 10-year JGB yield dropped -0.017 to -0.046.

A rare combination: risk-off for stocks amid rising Brent and falling USD

Stocks

In the run-up to the start of the earnings season, stock markets investors take a more cautious stance after an impressive rally since the beginning of the year. Chinese China A50 turned to decline, being in the overbought area. The Nikkei 225 was under the pressure of sales, unable to stay above the 200-day average. The indecision of market participants as they approach important levels may result in at least a short-term correction.

EURUSD

The single currency remains above 1.1200 against the dollar after ambiguous data on the US labour market last Friday. The stock markets alertness on Monday morning has not yet affected the single currency, which enjoys strong support on the downturns to 1.1200 on EURUSD. In the case of growth, the nearest important resistance is 1.13000, the upper limit of the trend to decline from the beginning of the year. But the cautious attitude of stock markets increases the chances that support at 1.120 may soon be broken.

GBPUSD

Last Friday GBPUSD found support on a downturn below 1.3000 and was able to hold above the 200-day average. It is equally important that the currency pair manages to stay above this important level for the last month and a half, despite the growing uncertainty around Brexit. An important positive factor for the British currency is the expectation that the Bank of England could raise the rate in 2019 in the fight against inflation, while economic indicators, pointing to the impulse weakening, still show good performance.

Oil

Brent climbed more than 2% on Friday, decisively exceeding $70 and closed above the 200-day average. The sharp breakdown of psychological and technical levels is a signal of bullish sign and supports an optimistic attitude. Behind the positive, there is news that the United States production growth is not enough to offset the OPEC cuts. This brings the issue of oil shortage to the agenda. On the other hand, for the first time in 7 weeks, there has been an increase in drilling activity in the United States, which signals an increase in production in the coming six months.

Bitcoin

Bitcoin held its positions on the weekend and is currently approaching the threshold $5,300, where the 200-day moving average is held. The CME reported about a nearly tenfold increase in the volume of trade in Bitcoin futures last week. However, at the start of the new week, there is a decrease in trading activity. You should be attentive to what is happening in the coming days, as the markets may feel the mood for profit taking.

UK Prime Minister Theresa May is scheduled to meet German Chancellor Angela Merkel and French President Emmanuel Macron tomorrow, just a day ahead of the EU summit. She'll also hold calls with other EU leaders today. May is generally expected to try to make her case for a Brexit extension till June 30.

But ahead of that, May needs to handle opposition Labour leader Jeremy Corbyn first. The two could meet against to find a compromised Brexit solution to get through the parliament. But May's spokesman reiterated her insistence for UK to have independent trading policy after Brexit. And that is clearly in conflict with Labour's requests for staying in the customs union.

Labour's Keir Starmer also said "Both us and the government have approached this in the spirit of trying to find a way forward. We haven't found that yet."He added "the ball is in the government's court" and "we need to see what they come back with and, when they do, we will take a collective position on that."

Lull benefits USD longs

At the start of the trading week, markets are lacking new drivers that could provide meaningful direction. Last week, US labor market data failed to provide any clarity. US NPF recovered to 196k from ultra weak 20k prior read while wage growth decelerated to 3.2% from 3.4%. Overall, the report provides no guidance into the pace of the US economic slowdown or potential direction of the Fed. Payrolls suggest that peak is behind us, and wages marginally weaker, it’s likely the Fed will hold current dovish bias. We don’t see this week’s CPI read changing this outlook. The Fed will want to see clear evidence of inflation acceleration before shifting direction again. The lack of a clear signal also means that solid manufacturing data and domestic auto sales combined with strong employment growth will produce moderate US growth. Baring a “shock” (political chaos, trade war etc.) we caution against deducing yield curve inversion as recessionary. It more likely given the data flow that growth will stabilize in 1Q and improve in 2Q. USD longs, and Euro shorts are increasing according to CFTC data. This trend indicates the markets are settling in for a period of wide US yields differential against G10, low volatility, and steady stock prices. We don’t expect USD strength to dissipate anytime soon give the uncertainty in Europe and UK.

Oil prices to maintain the pace

A rebound in US employment figures, ongoing sanctions in Iran, Venezuela and now war escalation in Libya without mentioning OPEC’s production cut and improving Sino-American trade discussions remain the major factors for current lift in oil prices. Despite an acceleration in US oil production, it seems that oil bulls are taking the hand.

Indeed, EIA Crude oil inventories for the week ended 29 March rose by 7.3 million barrels while Baker Hughes weekly oil and gas drilling rigs rig count figures for the US suggest a rise of 15 (+22 from last year), suggesting that production in the US is recovering following US shale production disruption in February. Yet, it appears that OPEC’s Group of 14 still has the last word on oil prices, whose recovery phase started in December 2018 following OPEC meeting, sustains. OPEC’s 4th output cut (-295’000 bpd in March; revised from -560’000 bpd to -380’000 in February) stays consistent and it is expected to maintain current pledge until end-June 2019 assessment. The boost of oil prices is therefore expected to keep up, as major resistance from October 2018 remains while a potential boost is conceivable in the event of a positive trade agreement between the US and China. Still risk of a potential NOPEC bill needs to be monitored carefully. WTI, Brent Crude and Shanghai Crude are trading 39.80%, 35.40% and 24.30% year-to-date.

Currently trading at 63.36, WTI is heading along 63.70 short-term. Major resistance at 76.41 (03/10/2018 high) remains.

EUR/USD has started the week with slight gains. Currently, the pair is trading at 1.1238, up 0.20% on the day. In economic news, it’s a light data calendar, so we’re unlikely to see much movement from the pair on Monday. Germany’s trade surplus widened to EUR 18.7 billion but still feel short the forecast of EUR 19.0 billion. The eurozone Sentix Investor Confidence improved to -0.3, marking a four-month higher. In the U.S., the sole event is factory orders, which is expected to decline by 0.5%. On Tuesday, the U.S. releases JOLTS Jobs Openings.

The eurozone economy continues to sputter, and it hasn’t helped that the German locomotive has also lost a gear. Germany’s manufacturing sector has been hit hard with the fallout of the nasty global trade war. This has dampened demand for German exports, such as vehicles and auto parts. German manufacturing PMI is showing contraction and factory orders have declined for four straight months. However, there was positive news on Friday, as German industrial production posted a strong gain of 0.7%, ending a streak of four successive declines. The improvement is a result of a surge in construction, but with demand from abroad remaining soft, the manufacturing sector is likely to face further headwinds.

With the eurozone mired in a slowdown, there was no surprise over the dour tone of the ECB minutes on Thursday. Policymakers noted that economic data continued to be soft, highlighting the manufacturing sector. The minutes expressed concern about continuing global trade concerns, which has had a negative effect on the eurozone economy. As well, inflation is expected to remain low. With the ECB acknowledging that the economic outlook is poor, there is little likelihood of an interest rate hike before 2020. This will make the euro less attractive to investors.

WTI oil price hit new 2019 high at $63.51 on Monday (also highest since early Nov 2018), in extension of last Friday's strong bullish acceleration and previous week's 5.2% rally.

OPEC+ group's production cut and US sanctions against Iran and Venezuela maintain strong bullish sentiment, also boosted by hopes on US/China trade deal that resulted in WTI's 38% rally year-to-date.

Bulls generated positive signal on Friday's close above 55WMA ($62.82) and pressure key barriers at $63.69/87 (Fibo 61.8% of $76.88/$42.36 / weekly cloud base), violation of which would generate fresh bullish signal.

Weekly cloud is narrowing and will twist next months, being magnetic for further advance.

Strong bullish momentum on daily chart is accompanied by formation of 10/200 golden cross that underpins the action, but strongly overbought daily / weekly slow stochastic warns of price adjustment in the near-term, though without clearer signals yet.

Corrective action needs to hold above broken 200SMA ($61.36) to keep bulls in play, with sustained break above $63.69 Fibo barrier to expose $68.73 (Fibo 76.4% and psychological $70.00 barrier.

Res: 63.69, 63.87, 64.43, 65.00
Sup: 63.23, 62.96, 61.81, 61.36

A four-month descending channel pattern has guided the common European currency lower against the Australian Dollar. This decline began after the currency pair made a U-turn from the upper boundary of the medium-term descending channel at 1.6369 on January 3.

The exchange rate breached the 50-hour simple moving average at 1.5814 during the morning hours of today's trading session.

By and large, it is likely that the currency exchange rate will aim for a resistance cluster at 1.5905 within this week's trading sessions.

Although, technical indicators on both the daily and the weekly time frames suggest that the EUR/AUD pair will continue its decline in the shorter term.

Notes/Observations

• UK two main political parties still trying to reach a new Brexit deal this week ahead of a EU Leader summit
• Oil prices remain firm as continued fighting in Libya sparks supply concerns
• China's Mar Foreign Reserves rise for the 5th straight month; gold buying also continued
• Markets will be looking ahead at central bank events due later in the week (ECB decision and FOMC Minutes on Wed), as well as any updates on Brexit.

Asia:

• China said to be pressured by US to give up ‘developing country' status believe it is important to global trade to keep this status
• Chinese state media: China and US made progress in the latest round of trade talks. Discussed draft agreement text on issues such as IP rights, technology transfer, trade balance, non-tariff measures, services, agriculture, and an implementation system. Talks to continue on the remaining issues.
• China Mar Foreign Reserves: $3.099T v $3.100Te (5th consecutive increase and a 7-month high); gold holding rise for the 4th straight month
• China Mar New Yuan Loans (CNY): 885.8B v 1.225Te
• China Mar M2 Money Supply Y/Y: 8.0% v 8.2%e

Europe:

• PM May: Now have a stark choice -- leave the EU with a deal or do not leave at all
• Govt is drawing up legal language that would guarantee that Parliament would have the final say on Brexit deal with Brussels
• Labour spokesperson: disappointed that the government had not offered real change or compromise. Urged the PM to come forward with genuine changes to her deal in an effort to find an alternative that could win support in Parliament
• Labour Shadow AG Chakrabarti: So far PM May had not moved an inch on her Brexit red lines
• Some Conservative MPs warn PM May that they will attempt to replace her within weeks if the UK is forced to participate in EU elections
• UK Parliament Leader Leadsom: another Brexit referendum would be the 'ultimate betrayal'

Americas:

• White House: Talks with China's Liu this week were productive; made progress on numerous key issues, but still significant work left to do in trade talks. To stay in contact with China on trade issues - Analysts speculate that it is increasingly unlikely the Congress will pass the revised NAFTA agreement before 2020 election due to opposition from Democrats and unions to labor provisions

Energy:

• Weekly Baker Hughes Rig Count 1,025 v 1,006 w/w (+1.9% w/w) (first rise in 7 weeks)

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.24% at 387.30, FTSE % at #, DAX -0.41% at 11,960.99, CAC-40 -0.14% at 5,468.38, IBEX-35 -0.72% at 9,442.20, FTSE MIB -0.20% at 21,715.50, SMI -0.19% at 9,523.00, S&P 500 Futures -0.15%]
• Market Focal Points/Key Themes: European Indices trade lower across the board following recent strength tracking mixed Asian Indices and lower US Index futures. On the corporate front shares of BMW trade slightly lower, coming off earlier steeper losses after the company announces over €1B in provisions while cutting its EBIT margin outlook for the automotive segment. On the earnings front, Impax Asset Management rises on AUM figures, with Bossard Holdings, Vp Plc and Poxel rising on earnings. Meanwhile Petroleum Geo-Services and Keyword Studios are among the decliners on earnings. Elsewhere Fiat Chrysler gains on a reported deal with Tesla to allow it have Tesla's electric cars counted towards its fleet to comply with EU emissions rules; Debenhams gains on continued hopes of a takeover by Sports Direct; D'ieteren declines on the stepping down of its CEO, while Continental, SDL and Fraport declines on analyst downgrades. Looking ahead notable earners include Renesola and Kenon Holdings.

Equities

• Consumer discretionary: Debenhams [DEB.UK] +14% (Sports Direct offer statement), Ramirent [RMR1V.FI] +2.5% (acquisition), Swatch [UHR.CH] +0.5% (CEO interview)
• Healthcare: Poxel [POXEL.FR] +1% (earnings)
• Industrials: BMW [BMW.DE] -0.5%, Daimler [DAI.DE] -0.5%, Volkswagen [VOW3.DE] +0.5% (BMW provision; cuts division outlook), Continental [CON.DE] -1.5% (analyst action), Fiat [FCA.IT] +1% (agreement with Tesla), CEVA Logistics [CEVA.CH] -6.5% (YTD earnings), Airbus [AIR.FR] +1% (Boeing to cut production), Aston Martin [AML.UK] -4.5% (analyst action), Veidekke [VEI.NO] +2% (contract)

Speakers

• ECB 2018 Supervisory Review and Evaluation Process (SREP): Overall CET1 demand: 10.6% v 10.1% y/y. Overall risk management framework of some banks should improve
• EU's Moscovici: Convinced that the UK would not leave the EU without a deal on April 12th
• UK Foreign Min Hunt: Talks with Labour party have been difficult; PM May leaving no stone unturned to reach a Brexit deal
• Turkey President Erdogan urged the country's election board to investigate widespread irregularities in local elections in Istanbul.
• China said to cut import duties on some goods with duties on computers, digital cameras cut to 13%; sports goods, textiles cut to 20%
• Saudi Energy Minister Khalid al-Falih: Getting into the stage of stabilized oil inventories but still needed to bring them down. The May JMMC meeting would be key in deciding whether to extend the current round of production cuts
• UAE Energy Min Mazrouei (OPEC president) stated that OPEC+ had not yet reduced inventories to the OECD 5-year average
• Russia Gov official Dmitriev (head of Direct Investment Fund): OPEC+ could decide to raise oil production in Jun but would not signal an end to coordination

Currencies/Fixed Income

• Quiet start to perhaps a key week for Europe as EU leaders gather to discuss the Brexit situation. Markets to be looking ahead at central bank events due later in the week (ECB decision and FOMC Minutes on Wed), as well as any updates on Brexit situation
• EUR/USD was steady with the focus on Wed ECB decision. Analysts were not expecting the central bank to reveal any more details regarding the third round of targeted longer-term refinancing operations (TLTRO-3). Pair steady at 1.1235 area

Economic Data

• (DE) Germany Feb Current Account Balance: €16.3B v €19.0Be; Trade Balance: €17.9B v €16.0Be; Exports M/M: -1.3% v -0.5%e; Imports M/M: -1.6% v -0.6%e
• (RO) Romania Q4 Final GDP (3rd reading) Q/Q: 0.9% v 0.7% prelim; Y/Y: 4.1%v 4.1% prelim
• (JP) Japan Mar Eco Watchers Current Survey: 44.8 v 47.8e; Outlook Survey: 48.6 v 49.1e
• (FR) Bank of France Mar Industrial (Business) Sentiment: 100 v 101e
• (SE) Sweden SEB House-Price Indicator: 18 v 13 prior
• (CZ) Czech Feb National Trade Balance (CZK): 15.0Be v 12.1B prior
• (CZ) Czech Feb Industrial Output Y/Y: +1.5%e v -1.1% prior; Construction Output Y/Y: No est v -13.2% prior
• (CZ) Czech Mar Unemployment Rate: 3.0%e v 3.2% prior
• (HU) Hungary Feb Preliminary Trade Balance: €0.8B v €0.4B prior
• (SE) Sweden Feb Private Sector Production M/M: 0.0% v 0.0%e; Y/Y: 1.2% v 2.0%e
• (SE) Sweden Feb Industrial Orders M/M: -2.0%t v -2.5% prior; Y/Y: -2.8% v -0.5% prior
• (SE) Sweden Feb Industry Production Value Y/Y: 2.7 v 3.0% prior; Service Production Value Y/Y: 0.8% v 1.4% prior
• (CH) Swiss Weekly Total Sight Deposits (CHF): 576.3B v 576.1B prior; Domestic Sight Deposits: 485.5B v 488.5B prior
• (TW) Taiwan Mar Trade Balance: $3.1B v $5.5Be; Exports Y/Y: -4.4% v -8.3%e; Imports Y/Y: +6.6% v -12.6%e
• (EU) Euro Zone Apr Sentix Investor Confidence: -0.3% v -2.0e
• (HU) Hungary Mar YTD Budget Balance (HUF): -141.9B v +67.3B prior

Fixed Income Issuance

• (NO) Norway sold NOK2.0B vs. NOK2.0B indicated in 3-month Bills; Avg Yield: 1.11% v 0.90% prior; Bid-to-cover: 2.54x v 1.51x prior

Looking Ahead

• (NL) Netherlands Debt Agency (DSTA) announcement on Green bond
• (IT) Italy Debt Agency (Tesoro) announcement on BTP auction for Thursday, Apr 11th - (ZA) South Africa announces details of upcoming I/L bond sale (held on Fridays)
• 05:30 (DE) Germany to sell €3.0B in BuBills
• 06:00 (IL) Israel to sell bonds - 06:45 (US) Daily Libor Fixing
• 07:00 (BR) Brazil Mar FGV Inflation IGP-DI M/M: No est v 1.3% prior; Y/Y: No est v 7.7% prior
• 07:00 (SL) Sri Lanka Central Bank (CBSL) Interest Rate Decision: no estimates: Current Standing Deposit at 8.00%; Standing Lending Rate currently at 9.00%
• 07:00 (IN) India announces details of upcoming bond sale (held on Fridays)
• 07:25 (BR) Brazil Central Bank Weekly Economists Survey
• 08:00 (CL) Chile Mar CPI M/M: 0.4%e v 0.0% prior; Y/Y: 1.9%e v 1.7% prior
• 08:00 (UK) Baltic Bulk Index
• 08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming issuance
• 08:15 (CA) Canada Mar Annualized Housing Starts: 194.0Ke v 173.2K prior
• 08:30 (CA) Canada Feb Building Permits M/M: No est v -5.5% prior
• 08:30 (CL) Chile Mar Trade Balance: No est v $0.3B prior; Total Exports: No est v $5.6B prior; Total Imports: No est v $5.3B prior
• 08:45 (EU) SSM chief Enria
• 09:00 (MX) Mexico Jan Gross Fixed Investment: No est v -6.8% prior
• 09:00 (IL) Israel Central Bank (BOI) Interest Rate Decision: Expected to leave Base Rate unchanged at 0.25%
• 09:00 (FR) France Debt Agency (AFT) to sell combined €3.7-4.9B in 3-month, 4-month, 6-month and 12-month Bills
• 10:00 (US) Feb Factory Orders: -0.5%e v +0.1% prior; Factory Orders (Ex-transportation): No est v -0.2% prior
• 10:00 (US) Feb Final Durable Goods Orders: No est v -1.6% prelim; Durables Ex-Transportation: No est v 0.1% prelim; Capital Goods Orders (Non-defense/ex-aircraft): No est v -0.1% prelim;; Capital Goods Shipments (Non-defense/ex-aircraft): No est v 0.0% prelim
• 10:30 (SE) Sweden FSA chief Thedeen
• 10:30 (SE) Sweden Central Bank (Riksbank) Floden on Panel on Developments in Mortgage
• 11:30 (US) Treasury to sell 3-Month and 6-Month Bills
• 11:45 (FR) ECB's Villeroy (France)
• 16:00 (US) Weekly Crop Progress Report

EUR/USD

Current level - 1.1234

The intraday outlook is positive, for a break through 1.1250, towards 1.1330 area. Crucial on the downside is 1.1175 low.

USD/JPY

Current level - 111.47

A reversal has been confirmed at 111.80 and the bias is bearish, for a dip to 111.15 area. The latter should provide a reliable base for another upswing towards 112.15 peak.

GBP/USD

Current level - 1.3054

The test of 1.2960 paints a possible reversal and I favor a break through the intraday resistance at 1.3120, en route to 1.3200 crucial hurdle.

During Friday's trading session, the European Single Currency depreciated against the US Dollar to pass through most of the technical indicators to end the day at 1.1215. On Monday, the rate was supported by SMAs to be located at the 1.1238 mark.

As apparent on the chart, the currency exchange rate broke the resistance levels of the simple moving averages to surge towards the weekly R1 at the 1.1253 mark. Most likely, the rate will end the session at the 1.1250 level.

Moreover, none of the technical indicators could prevent the EUR/USD from the surge!