Sample Category Title

Risk assets received a nice boost after the release of Friday's US Non-Farm Payrolls report. The 196,000 jobs added in March exceeded market estimates of 180,000 and February's figure was revised slightly upwards to 33,000 from 20,000. The added jobs are more than enough to keep the unemployment rate near its 50-year low if the momentum in the labor market is sustained over the coming months. However, this wasn't the only piece of information that encouraged equity bulls. It was the wage growth which slowed down to 3.2% from February's pace of 3.4%, which was the fastest in a decade. A strong headline figure along with weaker wage growth suggests two things. It confirms that the US remains in a growth mode, although it may be in a late cycle, and non-inflationary pressure will keep the Fed on hold, both of which are good ingredients for the bull market.

This week we'll get to know more about why the Federal Reserve decided to pause on hiking rates in 2019. On Wednesday, the Fed will release the minutes from the March meeting, and probably the biggest question is: does the Fed know something that investors don't know about? Markets are now expecting a 60% chance of a rate cut by year-end, and President Trump is seen pushing aggressively for lower rates. If inflationary pressures are headed lower, the Fed will probably consider Trump's advice, but at this stage, there are no signs of a fall in prices.

The mood from the US-China trade talks continues to be positive although no deal has been achieved yet. Officials from both sides will resume negotiations this week in hopes of resolving outstanding issues and put an end to the trade disputes. However, markets have been pricing in a breakthrough for a couple of months, so a deal should be compelling enough to provide a further push to risk assets.

Investors will also keep a close eye on US earnings, with JP Morgan and Wells Fargo kicking off the season on Friday. According to FactSet, earnings are expected to decline 4.2% in Q1, which will mark the first year-over-year decline since Q2 2016. While this decline in earnings is already priced in, it's the surprise factor and forward guidance that will lead Wall Street.

In commodity markets, Brent and WTI posted new highs for 2019. OPEC's ongoing supply cuts and US sanctions on Iran and Venezuela have been the major driver of prices throughout this year. However, the latest boost was received from an escalation of fighting in Libya which is threatening further supply disruption. If output from Libya is reduced significantly in the upcoming days and OPEC does not act, we may see a further 5-10% surge in prices over the next two weeks.

The price of crude oil jumped in overnight trading as traders cheered the ongoing supply cuts by OPEC. These cuts started after the December meeting in Vienna during which officials announced that they will cut production in a bid to rebalance the price, which had fallen to yearly lows. This move was supported by Saudi Arabia and Russia, which are the second and largest producers in the world. The price has also moved up because of the sanctions US has placed on Venezuela, which has the biggest oil reserves in the world. The price rose even as data from Baker Hughes showed that wells rose to 831 from the previous 816.

The US dollar weakened slightly in the Asian session as traders continued to think about Friday’s jobs numbers. Data showed that the economy added more than 196K jobs in March, which was higher than February’s 20K and the expected 176K. The unemployment rate remained at 3.8% while the participation rate declined slightly to 63%. The private non-farm payrolls increased to 182K. Concern among investors is on the weakening wage growth, which reduced to 3.2%. Over the weekend, Trump administration officials appeared to back Herman Cain, the embattled nominee for a Fed board position. He is the second controversial Fed board nominee by Trump, after the previous nomination of Michael Moore.

Today, traders will focus on Brexit, as the April 12 deadline nears. Theresa May has embarked on a strategy to include the Labour Party in negotiations. In addition, they will receive trade data from Germany. The exports and imports data for February are expected to show a decline of -0.5% and -0.7% respectively. The trade surplus is expected to decline slightly to $18 billion. In the United States, the Bureau of Census will release the capital goods and factory orders.

EUR/USD

The EUR/USD pair was little moved in early trading as traders reflected on the jobs numbers. The pair is now trading at the 1.1225 level, which is closer to the previous low of 1.1185. On the hourly chart, this price is along the 50-day and 25-day moving averages while the volumes have shrunk. The Average True Range and Standard Deviation has also shrunk. The pair will likely remain within these levels ahead of the ECB interest rates decision on Wednesday.

XBR/USD

The price of crude oil jumped to a YTD high. Brent and WTI reached highs of $70.50 and $63.45 respectively. On the daily chart, the price has been on an upward trend since December 12, when it traded at $50. The current price is slightly above the 50% Fibonacci Retracement level and above the 25-day and 50-day moving averages. The signal line and histogram of MACD has remained above the neutral line while the momentum indicator has stabilized above the 100 level. The price will likely continue moving higher ahead of the OPEC meeting expected in the coming week.

XAU/USD

The price of gold moved up slightly in early trading today. The XAU/USD pair is now trading at 1296, which is slightly higher than last week’s low of 1280. It is slightly lower than the important resistance of 1300. On the hourly chart, the price is slightly above the 50-day and 25-day moving averages while the RSI has moved slightly closer to the overbought level of 70. Today, the pair will likely move upwards to test the 1300 level.

The British pound is trading back towards the lower-end of its recent trading range against the US dollar as the United Kingdom approaches its Brexit deadline this week. The 1.2980 level is major weekly support area to watch for the GBPUSD pair this week. Weakness below the 1.2980 support level will likely trigger heavily technical selling towards the 1.2880 support region.

If the GBPUSD pair trades below the 1.3000 level, key support is found at the 1.2980 and 1.2880 levels.

If the GBPUSD pair trades above the 1.3060 level, key resistance is found at the 1.3100 and 1.3180 levels.

The euro has opened the new trading week under pressure against the US dollar following another bearish price close on Friday. The EURUSD pair is likely to come under further technical selling pressure while trading below the important 1.1216 support level. Only a move above the 1.1250 resistance level can negate the bearish weekly sentiment towards the EURUSD pair.

The EURUSD pair is heavily bearish while trading below the 1.1216 level, key technical support remains at the 1.1170 and 1.1130 levels.

If the EURUSD pair trades above the 1.1250 level, buyers may test back towards the 1.1290 and 1.1330 resistance levels.

Bitcoin retains a strong bid tone on Monday, after the number one cryptocurrency had its strongest monthly start in over twelve months. Bulls need to keep the BTCUSD pair above the $4,900 level in order to maintain the bullish intraday bias surrounding the cryptocurrency. Key weekly resistance for the BTCUSD pair is currently located at the $6,200 level.

The BTCUSD pair has a bullish bias while trading above the $4,900 level, key intraday resistance is found at the $5,300 and $5,700 levels.

Id the BTCUSD pair trades under the $4,900 level, sellers may test towards the $4,700 and $4,380 support levels.

EURUSD moved lower in the previous week but it managed to hold above the 21-month low of 1.1175, remaining in a downward sloping channel over the last three months. Prices hold below the red Tenkan-sen line, which is pointing down, suggesting a bearish view in the short-term. Moreover, the 20-and 40-simple moving averages (SMAs) are following the price action while the technical indicators are endorsing an opposite picture. Specifically, the MACD oscillator is heading slightly higher in the negative zone and the RSI is approaching the 50 level.

If the price continues today's upside structure, immediate resistance would come from the 1.1270 barrier, before touching the 20- and then the 40-SMAs around 1.1280 and 1.1300. If there is a successful break above this area, the price is likely to find the next obstacle around the 23.6% Fibonacci retracement level of the downleg from 1.1815 to 1.1175, near 1.1325. Higher up, the 38.2% Fibonacci of 1.1420 and the descending trend line would be the next targets.

On the other hand, in case of a sell-off, support would come from the 21-month low of 1.1175 while a retreat even lower would initially find a pause at the 1.1115 area, taken from the low on June 2017. More losses could send the price until the 1.0830 support, identified by the highs on January 2017.

In the medium-term picture, a dive beneath 1.1175 would bring the bearish outlook into play again. However, if the momentum indicators prove that the bearish move came to an end for now, this could drive EURUSD towards the upper boundary of the descending channel.

Rates: US 10-yr yield fails to retake 2.54%
The US 10-yr yield failed to regain previous support (2.54%) last week. Mixed March payrolls caused return action lower. This week's eco calendar is fairly thin. Wednesday's ECB meeting is the main event, but we expect the central bank to keep low following huge decisions in March. Core bonds could regain advantage in thin trading.

Currencies: USD remains resilient despite soft US wage data
Mediocre US wage data on Friday suggested that the Fed can keep a soft tone in the foreseeable future. However, the dollar didn't lose any further ground. At the same time, the EUR/USD 1.1177/87 support still survives. There is no clear USD trend visible at the start of the new week. More technical trading around current levels might be on the cards

The Sunrise Headlines

• US equity markets edged closer toward their all-time highs as all major indices gained ground again on Friday. Asian equities are mixed this morning with Chinese bourses underperforming after returning from holiday on Friday.
• UK PM May hopes to continue cross-party talks with opposition leader Corbyn, after talks appeared to be stuck yesterday. May urgently needs a sign of progress as she travels to Brussels on Wednesday seeking a new Brexit delay.
• US top economic advisor Kudlow said the US and China are 'closer and closer' to a trade deal and added that negotiations will continue this week over the phone. Chinese media said that the remaining issues are all 'hard nuts to crack'.
• EU trade commissioner Malmström voiced frustration over China's trade policies, sharing US frustration about China's model of subsides state-owned companies that expand internationally. Both parties meet tomorrow. (FT)
• Libya's government is organizing military resistance against Haftar, a military officer who supports a shadow government, whose army is approaching Tripoli. The disruptions in the OPEC member pushes the oil price (Brent) above $70 p/b.
• Local media report that the Italian government will use a contingency fund of €2 bn to ensure its structural deficit target is met after lower economic forecasts put its 2019 budget under pressure. The fund has the EU's approval.
• Today's eco calendar is close to empty. The US prints a final reading of durable goods orders (Feb). The Sentix Investor confidence (Apr) gets published for the EMU. The IMF and the World Bank hold their annual spring meeting this week.

Currencies: USD Remains Resilient Despite Soft US Wage Data

USD stays resilient despite soft US wage data

On Friday, the euro initially gained a few ticks on a positive risk sentiment and better German production data. The pair settled in a tight range in the 1.1230 area, awaiting the US payrolls. The US economy created more jobs than expected in March (196 000) and the unemployment rate stayed near the cycle low (3.8%), but wage growth disappointed (0.1% M/M - 3.2 % Y/Y). These poor wage statistics suggested that the Fed shouldn't change its wait-and-see stance anytime soon. US yields and the dollar briefly declined a few ticks up-on the release, but the dollar soon found its composure. EUR/USD even closed the day marginally lower at 1.1216. The dollar also gained a few ticks against the yen (111.73 vs 111.66).

Asian equities are showing a mixed/cautious picture this morning even as US equity bourses are coming ever closer to the all-time peak levels. The dollar is trading with a tentative negative bias. USD/JPY hit an intraday air pocket as Japanese equities are facing some, albeit modest headwinds. EUR/USD again rebounds off the low 1.12 support area.

Later today, there are only second tier data in EMU. Euro traders might keep an eye at the German foreign trade data as the external sector was heavily weighing on growth of late. US factory orders are probably also only of intraday significance, at best. Brexit and the US-China trade talks remain wildcards for trading. We were a bit surprised by Friday's, albeit modest, USD gain. If US wage (or price) data remains soft, investor anticipation on a potential Fed rate cut might stay alive. In this context, further sustained USD gains are not that evident. Last week, EUR/USD came close to the 1.1177/87 support, but a real test/break didn't occur. For that to happen, unexpected negative EMU news or surprisingly strong US data are probably needed. Recent data evidence doesn't support this scenario. We keep the view that a sustained EUR/USD decline isn't that evident as we don't expect the Fed to leave its wait-and-see bias anytime soon.

In technical trade on Friday, sterling drifted lower into the weekend as the negotiations between the conservative Party and labour didn't yield any concrete progress to end the Brexit stalemate. Uncertainty persists this morning as the EU summit on Wednesday is coming ever closer. EUR/GBP is currently trading near 0.86. The scenario that the UK must accept a long delay is becoming ever more likely. However, this might also mean prolonged uncertainty. We don't anticipate substantial euro gains going into the April 10 summit.

EUR/USD: tentative signs of bottoming?

General Trend:

• With little catalyst to keep momentum going markets faltered after higher openings
• USD is mixed against the majors, with little prevailing trend
• Nissan shareholders vote to remove Ghosn as a director, severing his last ties with the company. CEO has indicated they may go after him for damages.
• G7 agreed on all major points with the exception of Israel/Palestine and Iran
• China’s top banks are putting more loan resources into property loans despite the govt calling on them to fund small businesses.
• US, China trade talks continue, with no specific end date in sight, sticking points remain the same
• China March foreign reserves came in at a 7-month high and had their 5th consecutive increase
• Oil gained as fighting increases around Tripoli
• Big week ahead for Brexit, with PM May heading to Brussels mid-week; shes indicated they need a deal or to remain, legislation said to be going into place that would put Parliament in control of the process

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.1%
• BHP.AU Plans to cut over 700 finance and IT jobs - The Australian
• RSG.AU Reports Q3 gold production 98.1K oz v 74.0K q/q
• PPS.AU Notified by a key Australian institutional client of the investment platform that it has selected an alternative supplier; Expands services with Shaw and Partners
• NAB.AU In talks to sell New Zealand life insurance unit to Partners Life - Aussie press
• (AU) Australia buyback A$900M in 4.50% April 2020 and 5.75% May 2021 bonds
• (AU) Australia sells A$400M v A$400M indicated in 2.75% June 2035 bonds, avg yield 2.1445%; bid to cover 3.22x
• (AU) Australia Mar ANZ Job Advertisements m/m: -1.7% v -0.8 prior

Japan

• Nikkei 225 opened +0.4%
• (JP) Japan Econ Min Seko: Dissatisfaction among franchisees is growing, need to find remedies for these long hours - speaking to leaders of 24 hour convenience store operators
• (JP) JAPAN FEB PRELIMINARY ADJUSTED CURRENT ACCOUNT: ¥1.96T V ¥1.9TE; CURRENT ACCOUNT BALANCE: ¥2.68T V ¥2.63BE
• (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BOJ to keep rates very low for extended period - speaking at Branch Managers meeting; expect CPI to pick up to 2% target
• 7201.JP CEO Saikawa: Want to consult with shareholders on next move and get approval for total removal of former chairman Ghosn - speaking at extraordinary shareholder meeting
• (JP) Japan PM Abe: Will do all possible to manage economy amid global uncertainty; to visit France, Italy and US from Apr 22-29
• (JP) Japan Mar Bankruptcies Y/Y: -16.1% v -4.5% prior

Korea

• Kospi opened +0.4%
• 003490.KR Chairman Cho Yang Ho has died from illness
• (KR) Bank of Korea (BOK) sells KRW1.3T in 1-yr bonds, avg yield 1.78%
• (KR) South Korea President Moon approval rating falls to 47.3% last week after a failed nomination of a new minister he had to withdraw - Yonhap

China/Hong Kong

• Hang Seng opened +0.6%; Shanghai Composite opened +0.8%
• (CN) CHINA MAR FOREIGN RESERVES: $3.099T V $3.1TE (7-month high, 5th consecutive increase)
• (CN) Chinese state media: China and US made progress in the latest round of trade talks (Saturday)
• (CN) White House indicates there is no time table for trade talks with China, making the likelihood of a summit between Trump and President Xi unlikely before the end of April – Nikkei
• (CN) China regulators may ask brokers to subscribe 2-5% of tech IPOs - China press
• (CN) China "government guidance funds" to direct capital to chosen sectors currently targeting investments over $1.48T – SCMP
• (CN) China PBoC Open Market Operation (OMO): Skips for 13th consecutive session: Net: CNY0 v CNY0 prior
• (CN) China PBoC sets yuan reference rate: 6.7201 v 6.7055 prior
• (CN) According to SCMP, despite China govt's push for state owned banks to lend more to private companies, half of new loans issued by China’s big six banks in 2018 went to individual property buyers and only 29% went to private companies v 57.5% y/y
• (CN) China pressured by US to give up ‘developing country’ status believe it is important to global trade to keep this status - SCMP

North America

• PINS Expected to set IPO price range below last valuation - US financial press
• (US) 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 - financial press

Europe

• (UK) PM May: we now have a stark choice -- leave the EU with a deal or do not leave at all
• FCA.IT Reached agreement with Tesla, where it will pay Tesla "hundreds of millions of euros" to have Tesla's electric cars counted in its fleet which will allow it to avoid large fines for breaking new EU emissions rules – FT
• (G7) France Foreign Min Le Drain: G7 nations are broadly in agreement on a range of issues, except for differences over approach to Iran and Israeli-Palestinian conflict
• (UK) Govt is drawing up legal language that would guarantee that Parliament would have the final say on Brexit deal with Brussels - Sunday Times

Levels as of 01:20ET

• Hang Seng +0.2%; Shanghai Composite -0.5%; Kospi -0.1%; Nikkei225 -0.2%; ASX 200 +0.6%
• Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.4%; FTSE100 -0.4%
• EUR 1.1214-1.1233; JPY 111.35-111.78; AUD 0.7088-0.7109; NZD 0.6722-0.6738
• Commodity Futures: Gold +0.4% at $1,300/oz; Crude Oil +0.4% at $63.35/brl; Copper +0.7% at $2.91/lb

The USD/JPY could be ready to build a bearish ABC zigzag within the expanded WXY (pink) correction of wave 2 (purple). The main bearish targets are the Fibonacci retracement levels of wave 2 vs 1.

The USD/JPY seems to have completed 5 bullish waves (green/blue) within the wave C (purple). A new 5 wave pattern (blue) could emerge within the wave A (purple) of a larger wave Y (pink).

Daily Pivots: (S1) 1.1202; (P) 1.1223; (R1) 1.1237; More.....

Outlook in EUR/USD remains unchanged and intraday bias stays neutral. As long as 1.1273 minor resistance holds, further decline is in favor. On the downside, decisive break of 1.1176 will resume the down trend from 1.2555. On the upside, however, break of 1.1273 support turned resistance will indicate short term bottoming. Intraday bias will be turned back to the upside for 1.1448 resistance instead.

In the bigger picture, medium term weakness was revived as the weak rebound from 1.1176 was rejected well below 55 week EMA and failed to sustain above 55 day EMA. Focus is back on 1.1176 low, with 61.8% retracement of 1.0339 (2016 low) to 1.2555 (2018 high) at 1.1186. Decisive break there will resume whole down trend from 1.2555. Such decline target 1.0339 low next. On the upside, firm break of 1.1569 resistance is needed to be the first sign of medium term bottoming. Otherwise, downside breakout will be in favor.