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WTI oil rose to new nearly five-month high above $62 on Tuesday, in extension of Monday's 2.7% rally (the second biggest one-day gains in 2019).

Oil prices rallied on stronger than expected Chinese Manufacturing data on Monday that offset negative impact on rising concerns about lower demand and remain supported by production cut by main world oil exporters and possibility of further sanctions on Iran and Venezuela.

Monday's break and close above 200SMA was strong bullish signal for continuation of larger uptrend from 2018 low at $42.36, which was on hold for two-week consolidation.

Improved sentiment supports the action for extension towards next targets at $63.69/87 (Fibo 61.8% of $76.88/$42.36 / base of thinning weekly cloud), however, overbought RSI / slow stochastic warns that bulls may take a breather before attacking targets.

Broken 200SMA should ideally contain, but deeper dips towards former highs ($60.37) and rising 10SMA ($60.08) cannot be ruled.

Bulls are expected to remain intact while holding above broken psychological $60 barrier, now reverted to support.

Res: 62.15, 63.00, 63.69, 63.87
Sup: 61.52, 60.59, 60.37, 60.08

The British pound has moved sharply lower against the US dollar after the United Kingdom Construction PMI came in much weaker than expected for the month of January. The GBPUSD pair is now testing key trendline support, while technical indicators are also starting to turn down across the lower time frames. A sustained break below the key trendline exposes further losses towards the 1.3000 support level.

The GBPUSD pair is bearish while trading below the 1.3050 level, key technical support is found at the 1.3000 and 1.2970 levels

If the GBPUSD pair trades above the 1.3090 level, key resistance remains at the 1.3130 and 1.3170 levels.

The euro has continued to decline against the US dollar during the European trading session as the greenback recovers early week losses. The EURUSD pair has a strong bearish outlook while trading below the 1.1216 level, with breakout weekly support located at the 1.1170 level. Only a sustained move above the 1.1250 level can negate the intraday bearish bias surrounding the EURUSD pair.

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

If the EURUSD pair trades above the 1.1250 level, bulls may test back towards the 1.1290 and 1.1310 resistance levels.

EUR/USD has ticked lower on Tuesday. Currently, the pair is trading at 1.1205, down 0.08% on the day. On the release front, the sole eurozone event is PPI, which dipped to 0.1%, shy of the estimate of 0.2%. In the U.S., core durable goods orders is expected to improve to 0.3%, while durable goods orders is forecast to plunge 1.1%. On Wednesday, Germany and the eurozone post services PMIs, and the eurozone releases retail sales. The U.S. will publish ISM Non-Manufacturing PMI and ADP nonfarm payrolls.

The global trading war has dampened economic activity, weighing on manufacturing sectors across the world. Germany and the eurozone have also been hit, in particular the German automotive industry. It came as no surprise that German and eurozone manufacturing PMIs disappointed in March, with readings pointing to contraction. The German reading dropped to 44.1, losing ground for an eighth straight month. This reading was the lowest since 2012. The all-eurozone release has also been steadily falling, pointing to weakness in the manufacturing sector.

The euro held its own on Monday, ignoring the weak manufacturing numbers. Meanwhile, there was better news out of China’s manufacturing industry. Chinese Caixin Manufacturing PMI didn’t sparkle, but improved to 50.8 and easily beat the estimate of 50.1 points. Investors cheered as the indicator climbed to an 8-month high, after posting three successive releases indicating contraction. The Chinese economy has been hit hard by the trade war with the U.S., and a piece of good news was enough to raise the confidence levels of investors.

Weak US data continues to flow

The week started off on a bad foot in the US, at least from an economic standpoint. February retails came in well below estimate and heightened concerns about a severe economic slowdown. The last batch of economic data was no pretty; however, the upside revisions in January’s stats soften the impact. Advanced retail sales contracted 0.4%m/m in February, while economists were expecting an increase of 0.2%. Previous month’s reading was revised to +0.7% from +0.2%. The core measure that excluded auto sales contracted 0.4%m/m versus an expected increase of 0.33%; January’s print was lifted to +1.4%m/m from 0.9% initially estimated.

Overall, the upward revisions roughly offset the disastrous readings of February. Consequently, the FX didn’t reacted much to the publication as investors’ attention was focused on Brexit talks in the House of Commons. On a more positive note, ISM manufacturing climbed to 55.3 in March compared to 54.2 in February and 54.5 estimated.

Despite upward revisions in all of retail sales measures, consumers’ confidence has been severely damage over the last few months, thanks to a market sell-off, trade tensions between China and the US and a government shutdown. The good news is that the effects of those events won’t last. However, one worrying aspect remains, the economic boost provided by Trump tax cut and increased spending is ending. Will more liquidity from the Federal Reserve be the solution?

Swissie rebound vivid despite weaker growth

Concerns about global economic health, Brexit stalemate and Sino-American trade tensions continue to generate great demand for the franc despite economic releases pointing towards an economic slowdown. Under current settings, it seems more convincing that the Swiss National Bank (SNB) will be making use of its monetary policy tools (i.e. rate cuts, FX interventions) if necessary. The Swissie gained 4.75% against the single currency since last year and market participants appear to favor further appreciation as suggested by risk reversals. Yet the Swiss economy is not spared by current conditions.

The recent drop in March Manufacturing PMI of 50.30 (-5.1 points), its lowest level since December 2015 and the strongest drop since the 2008 financial crisis worries. Switzerland’s strong dependence to the single market and a broad uncertainty effect are however the main drivers of current results. Still, the case is not an absolute rule as shown by the Raiffeisen SME index pointing to its highest range since November 2018. Furthermore, the downtrend in the KOF economic barometer paused thanks to positive impulses from goods producing sectors suggesting that the Swiss economy should remain robust this year (GDP growth est. 1.50%), despite an expected slowdown in 2Q 2019. Recent CPI figures came stronger as expected (+0.50% m/m and +0.70% y/y) but remain largely below the 2% target. Recent inflation forecasts are pointing towards 0.60% for the year.

EUR/CHF is currently trading at 1.11945, approaching 1.11740 short-term.

Chinese PMI boost short-lived

We appear to be seeing some profit taking on Tuesday, following a strong start to trade on Monday on the back of some encouraging Chinese PMIs.

Markets in Europe are mixed, with the FTSE 100 the outperformer among the indices, buoyed by a softer pound. US futures look a little flat, with the boost from the data proving short-lived. Perhaps this isn’t surprising, considering that this is just one month of data that may be an outlier. Sentiment can also quickly shift which can make the PMIs more volatile than other indicators. Still, at a time when everyone is worried about the global economy and a trade war between the world’s two largest economies, some good news and reports are always welcome.

Talks between the US and China also appear to be progressing well, which may have contributed to the improved sentiment among Chinese businesses. The negotiations may be taking longer than Trump envisaged but the most important thing is that terms are agreed and tariffs removed which in turn removes a huge amount of risk and uncertainty for the global economy.

Another day, another inconclusive vote

It’s now 10 days (again) until the UK possibly – but probably not – leaves the European Union and MPs can still not agree on what that means. A second day of indicative votes in Parliament, this time with only four options on the table, failed to find a majority in support of any model or plan. Not the ideal scenario when the default remains leaving with no deal on 12th April – an option MPs strongly oppose – and the most likely option is a long extension, something I’m sure the public won’t be thrilled about. It really is a mess.

The inability of MPs to get behind anything is not rattling traders though, with the pound remaining volatile but still not heading south. If that happens, it would suggest the prospect of no deal has dramatically increased, which some are claiming it already has. If this is true then traders confidence in it being avoided may have left the pound very vulnerable. It’s now back to the cabinet, which is reportedly meeting for five hours this morning to discuss the next step, which – to the bewilderment of many – is expected to be more votes on the same proposals on Wednesday.

Bitcoin surges to four and a half month high

It feels like a blast from the past when I look at a bitcoin chart this morning, with the cryptocurrency – which has been in consolidation mode and rather boring since November – soaring more than 20% in under an hour. If there was a catalyst for the move then it’s a well-kept secret right now which suggests there may be something more technical at play.

Every time we’ve traded around $4,200-4,400 since late November, priced has peaked and headed south. Interestingly though, we have seen a series of higher lows in that time – which means traders are buying the dips higher each time. Whatever the catalyst was for the move above $4,400 this morning, the move was likely exacerbated by a combination of excited bulls and panicking sellers. The volatility may well remain in the coming days which will keep things interesting and if we can hold above $4,400 then it could be a near-term bullish signal, with $6,000 being notable resistance above.

Notes/Observations

• UK Parliament again failed to achieve a parliamentary majority to find a path forward on Brexit; UK cabinet meeting to consider options (including delaying Brexit by months or even fresh elections)

Asia:

• RBA left its Cash Rate unchanged at 1.50% (as expected). Omitted its prior comment noting "central scenario was still for the Australian economy to grow by around 3.0% in 2019. To set policy to support sustainable growth and achieve the inflation target over time

Europe:

• UK Parliament rejected all 4 Brexit motions. Voted 273 in favor, 276 against on Motion 'C' which called for the govt to negotiate a permanent Customs Union; Voted 261 in favor, 282 against on Motion 'D' which called for govt to seek an enhanced Norway-style Brexit deal, known as 'Common Market 2.0'; Voted 280 in favor, 292 against on Motion 'E' which called for a confirmatory referendum to approve the Brexit deal; Voted 191 in favor, 292 against on Motion 'G' which calls for the govt to revoke Article 50 as a last resort to prevent a 'no deal' Brexit ('emergency break' motion)
• UK Brexit Min Barclay: Default position continued to be UK to leave EU in 11 days; govt still sought a deal
• Consensus said to be rising in UK Cabinet to reluctantly accept customs union if PM May deal is rejected during a run-off final round of indicative voting
• PM May said to hold a cabinet meeting on Tuesday to decide what to do and whether to hold a Meaningful Vote 4 (MV4)
• Chancellor of the Exchequer Hammond expected to tell Cabinet on Tuesday the Tories might have to consider referendum since neither party or country could afford election. Could also tell Cabinet of need for comprise and likely to involve customs union although the Chancellor is "not Enthusiastic" about it

Americas:

• Atlanta Fed's GDPNow model now tracking 1.7% SAAR, up from 1.5% - BOC Gov Poloz stated that the outlook continued to warrant rates below neutral rate

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 -0.06% at 383.46, FTSE +0.48% at 7,352.29, DAX +0.02% at 11,682.35, CAC-40 +0.03% at 5,406.92, IBEX-35 -0.05% at 9,330.36, FTSE MIB -0.27% at 21,463.50, SMI -0.10% at 9,522.00, S&P 500 Futures -0.11%]
• Market Focal Points/Key Themes: European Indices trade mixed fading from earlier highs after gains in Asia and a strong session in Wallstreet overnight and flat futures this morning. On the macro front Brexit headlines dominate as PM May's cabinet meet again this morning after MPs voted down four alternative proposals yesterday. On the corporate front shares on UK industrial name Rolls Royce declines after reports of earlier then expected engine blade deterioration, with some 1000 blades in need for early replacement. Azelio is a notable gainer in Sweden after announcing a MoU with JD aviation, while on the earnings front, Hostelworld and Wizz Air both gain on earnings and updates, with MP Evans and Gear4Music among the decliners. In other news share of Bonmarche declines sharply as Spectre Holdings acquired 26.2M shares at 11.45p; Pantheon Resources falls over 25% following an update in relation to the testing of the Alkaid well. Looking ahead notable earners include Wallgreens Boots Alliance, Lamb Weston and Angiodynamics among others.

Equities

• Consumer discretionary: Wizz Air [WIZZ.UK] +3.5% (trading update; load factor), Ahold Delhaize [AD.NL] -1.5% (Amazon to cut prices in Whole Foods), Lenta [LNTA.UK] +3% (stake), Bonmarche Holdings [BON.UK] -25% (stake), Hostelworld Group [HSW.UK] +4% (earnings), Workspace Group [WKP.UK] -1% (CEO to step down)
• Energy: Azelio [AZELIO.SE] +16% (MoU with JD Aviation)
• Financials: Swedbank [SWEDA.SE] +3% (appointment)
• Industrials: Rolls-Royce [RR.UK] -2% (Singapore Airlines found blade deterioration in Rolls-Royce engine blades), Nordex [NDX1.DE] +2% (order), ThyssenKrupp [TKA.DE] -0.5% (press speculation on divestment), Latecoere [LAT.FR] +5% (stake), Pantheon Resources [PANR.UK] -26% (Alkaid well update)

Speakers

• ECB's Villeroy (France) reiterated Council view in a letter to France President Macron that monetary policy to remain accommodative for as long as necessary. ECB could be flexible on normalization timetable and calibrate tools with complete pragmatism
• EU Brexit negotiator Barnier reiterated that existing Withdrawal Agreement was the only option if the UK sought to leave the EU in an orderly fashion; Believed that a No deal outcome was very likely now. Reiterated that any further Brexit delay would need specific reasons
• German Chancellor Merkel: Disorderly Brexit would mean great uncertainty, hoped UK could resolve exit from EU
• Portugal Govt said to cut 2019 GDP growth forecast from 2.2% to 1.9%
• EU's Juncker: Would like the Italian govt make more effort on growth
• Australia Govt put out its 2019/20 budget which noted that the domestic economy was sound but clear and clear risks were emerging. It cut FY19/20 GDP growth forecast from 3.00% to 2.75% and cut FY20/21 GDP growth from 3.0% to 2.75%. Raised FY19/20 budget surplus from +A$2.2B to A$7.1B while maintaining FY20/21 budget surplus at A$ 11.0B - Russia Energy Min Novak stated that had reached pledged under OPEC+ agreement Output reduction of 225K bpd reached at the end of March. Russia Mar oil production at 11.30M bpd

Currencies/Fixed Income

• GBP was initially softer in the session after the UK Parliament again failed to achieve a parliamentary majority to find a path forward on Brexit; UK cabinet currently meeting to consider options (including delaying Brexit by months or even fresh elections). GBP/USD probed the lower end of the 1.30 area over fears of a no-deal outcome but recovered to around 1.3070 as the NY morning approached.
• EUR/USD hovering just under the 1.12 level in quiet trade. Overall the greenback holding onto recent strength as US economy appeared to be recovering from Q1 softness
• The TRY currency (Lira) was weaker as dealers noted that the swap-rate was lower which paved the way for short-sellers to emerge against the Lira. The Lira has been hampered by recent local elections results and diplomatic disputes between the United States and Turkey

Economic Data

• (IN) India Mar PMI Manufacturing: 52.6 v 54.3 prior (19th month of expansion and lowest since Sept 2018)
• (CH) Swiss Mar CPI M/M: 0.5% v 0.4%e; Y/Y: 0.7% v 0.6%e; CPI Core Y/Y: 0.5% v 0.4%e
• (CH) Swiss Mar CPI EU Harmonized M/M: 0.3% v 0.2%e; Y/Y: 0.7% v 0.6%e
• (ES) Spain Mar Net Unemployment M/M: -34.0K v -28.0Ke
• (CZ) Czech Q4 Final GDP (3rd reading) Q/Q: 0.8% v 0.9%e; Y/Y: 2.6% v 2.8%e
• (UK) Mar Construction PMI: 49.7 v 49.8e (2nd straight contraction)
• (EU) Euro Zone Feb PPI M/M: 0.1% v 0.2%e; Y/Y: 3.0% v 3.1%e

Fixed Income Issuance

• (SK) Slovakia Debt Agency (Ardal) to sell €1.0B in 11-year notes via syndicate; guidance seen +30bps to mid-swaps
• (ES) Spain Debt Agency (Tesoro) sold total €4.52B vs. €4.0-5.0B indicated range in 3-month and 6-month Bills
• (ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B in 2023, 2030 and 2048 bonds
• (CH) Switzerland sold CHF519.0M in 3-month Bills; Avg Yield: -0.761% v -0.778% prior
• (ID) Indonesia sold total IDR8.03T vs. IDR8.0T target in 6-month Islamic Bills, 2-year, 4-year, 15-year and 30-year Project-based Sukuk (PBS)

Looking Ahead

• (BR) Brazil Feb CNI Capacity Utilization: No est v 78.3% prior
• (RO) Romania Central Bank (NBR) Interest Rate Decision: Expected to leave Interest Rate unchanged at 2.50%
• 05:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 05:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 05:30 (UK) DMO to sell £3.0B in 1.00% Apr 2024 Gilts
• 05:30 (BE) Belgium Debt Agency (BDA) to sell €1.0B in 3-month Bills; Avg Yield: % v -0.534% prior; Bid-to-cover: x v 1.69x prior (Mar 12th 2019)
• 05:30 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 06:00 (IE) Ireland Mar Unemployment Rate: No est v 5.6% prior
• 06:30 (EU) ESM to sell 3-month bills
• 06:45 (US) Daily Libor Fixing
• 07:45 (US) Weekly Chain Store Sales data
• 08:00 (BR) Brazil Feb Industrial Production M/M: +1.0%e v -0.8% prior; Y/Y: +2.3%e v -2.6% prior
• 08:00 (CL) Chile Feb Retail Sales Y/Y: 1.5%e v 0.0% prior; Commercial Activity Y/Y: No est v 4.4% prior
• 08:00 (UK) Baltic Bulk Index
• 08:00 (RO) Romania Central Bank gov Isarescu to hold post rate decision press conference
• 08:00 (RU) Russia announces upcoming OFZ Bond issuance
• 08:30 (US) Feb Preliminary Durable Goods Orders: -1.8%e v +0.3% prior; Durables Ex-Transportation: +0.2%e v -0.2% prior; Capital Goods Orders (Non-defense/ex-aircraft): 0.1%e v 0.8% prior; Capital Goods Shipments (Non-defense/ex-aircraft): 0.0%e v 0.8% prior
• 08:55 (US) Weekly Redbook Retail Sales data
• 09:00 (EU) Weekly ECB Forex Reserves
• 09:45 (US) March ISM New York: No est v 61.1 prior
• 09:45 (UK) BOE to buy £1.15B in APF Gilt purchase operation
• 10:00 (MX) Mexico Feb Leading Indicators M/M: No est v 0.00 prior
• 10:30 (NZ) Fonterra Global Dairy Trade Auction: Dairy Trade price index: No est v +1.9% prior
• 10:30 (CA) Canada to sell 3-month. 6-month and 12-month Bills
• 11:00 (DK) Denmark Mar Foreign Reserves (DKK): No est v 455.6 prior
• 11:00 (MX) Mexico weekly International Reserves data
• 16:30 (US) Weekly API Oil Inventory data

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.12274
Open: 1.12120
% chg. over the last day: -0.16
Day's range: 1.11919 – 1.12122
52 wk range: 1.1214 – 1.2557

EUR/USD remains in a bearish mood. Right now the trading instrument is consolidating around 1.12000. The pressure on the EUR is caused by the weak economic releases.

The Economic News Feed for 02.04.2019:

Primary Orders on Durable Goods (US) – 15:30 (GMT+2:00);

The indicators point to the power of the buyers, the price fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone and keeps falling which gives a signal to sell EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations

Support levels: 1.11850, 1.11500
Resistance levels: 1.12150, 1.12450, 1.12800

If the price fixed below 1.11850, expect the quotes to fall toward 1.1500-1.11300.

Alternatively, the quotes can correct toward 1.12450-1.12600.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.30395
Open: 1.30925
% chg. over the last day: +0.35
Day's range: 1.30238 – 1.31141
52 wk range: 1.2438 – 1.4378

GBP/USD remains active. The financial market participants are evaluating the Brexit situation - so far the British parliament refused to approve 4 alternative Brexit strategies. The EU representatives consider "hard Brexit" the most plausible option. The GBP/USD quotes are testing the 1.30300 and 1.30800 support and resistance levels. You should open positions from them.

At 11:30 (GMT+3:00) the UK will publish a construction PMI.

The indicators point to the power of the sellers, the price fixed below 50 MA and 200 MA.

The MACD histogram is in the negative zone, which points to the bearish mood.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line which gives a signal to sell GBP/USD.

Trading recommendations

Support levels: 1.30300, 1.29850
Resistance levels: 1.30800, 1.31200, 1.31500

If the price fixes below 1.30300, expect the quotes to fall toward 1.29850-1.29700.

Alternatively, the quotes can grow toward 1.31200-1.31500.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.33465
Open: 1.33046
% chg. over the last day: -0.27
Day's range: 1.33027 – 1.33371
52 wk range: 1.2248 – 1.3664

CAD kept strengthening against the USD. The quotes updated the local minimums and found support at 1.33100. 1.33400 acts as a mirror support. The demand for USD weakened after ambiguous economic releases while CAD is supported by the oil quotes dynamics. The currency pair can descend further, you should open positions from the key levels.

The Economic News Feed for 02.04.2019 is calm.

The price fixed below 50 MA and 200 MA, which points to the power of the sellers.

The MACD histogram is in the negative zone but above the signal line which gives a weak signal to sell USD/CAD.

The Stochastic Oscillator is near the overbought zone, the %K line is above the %D line which points to the bullish mood.

Trading recommendations

Support levels: 1.33100, 1.32900, 1.32600
Resistance levels: 1.33400, 1.33750, 1.34000

If the price fixes below 1.33100, expect the qutoes to fall toward 1.32700-1.32500.

Alternatively, the qutoes can grow toward 1.33700-1.33900.

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 110.015
Open: 111.344
% chg. over the last day: +0.42
Day's range: 111.285 – 111.455
52 wk range: 104.56 – 114.56

USD/JPY remains in a bullish mood and updated the local maximums yesterday. The quotes are consolidating around 111.450. 111.150 acts as the closest support. Keep an eye on the economic releases and the US Treasury bonds yield. You should open positions from the key levels.

The Economic News Feed for 02.04.2019 is calm.

The price fixed above 50 MA and 200 MA which points to the power of the buyers.

The MACD histogram is in the positive zone but below the signal line which gives a weak signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which also points to the bullish mood.

Trading recommendations

Support levels: 111.150, 110.850, 110.500
Resistance levels: 111.450, 111.700, 112.000

If the price fixes above 111.450, expect the quotes to grow toward 112.000.

Alternatively, the quotes can fall toward 110.850-110.600.

During Monday's trading session, the currency exchange rate depreciated to the 1.1200 level as it was predicted! On Tuesday morning, the rate passed through the support level of the 61.80% Fibo to be located at the 1.1203 mark. Note, the chart was fully reviewed to make changes to the patterns!

In regards to the near-term future, most likely, the rate will pass the weekly S1 at the 1.1175 mark to end the trading session at the 1.1150 level.

However, today's US Durable Good Orders release at 12:30 GMT could push the rate to break through the resistance levels of the 55-hour and the 100-hour simple moving averages to trade at the 1.1220 level.

A resistance cluster formed by the combination of the weekly and the monthly pivot points at 0.6837 restricted bulls from pushing the New Zealand Dollar higher against the US Dollar on Monday. The currency pair declined about 0.92% at the end of yesterday's trading session.

The exchange rate is currently trading near the lower boundary of a falling wedge pattern at 0.6770 and could be set for a breakout. If this breakout occurs, bearish traders could target the bottom border of a medium-term ascending channel at 0.6724.

However, if the support line holds, the pair might aim for a resistance of the resistance cluster at 0.6837.