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Daily Pivots: (S1) 0.9938; (P) 0.9957; (R1) 0.9969; More...

Intraday bias in USD/CHF remains neutral as consolidation from 0.9879 is extending. As long as 1.0010 resistance holds, further decline remains in favor. On the downside, below 0.9879 will resume the fall from 1.0124 to 0.9716 key support. Nevertheless, break of 1.0010 will turn bias back to the upside for 1.0124/28 resistance zone.

In the bigger picture, focus is back on medium term trend line (now at 0.9849). Decisive break there will argue that whole rise from 0.9186 has completed. Further break of 0.9716 will confirm reversal and target next support level at 0.9541. Nevertheless, there is still a chance that price action from 1.0128 are forming a consolidative pattern with fall from 1.0124 as third leg. If this is the case, stronger support should be seen between 0.9716 and the trend line to contain downside.

Pivot (invalidation): 110.85

Our preference Long positions above 110.85 with targets at 111.30 & 111.55 in extension.

Alternative scenario Below 110.85 look for further downside with 110.55 & 110.25 as targets.

Comment The RSI calls for a bounce.

Daily Pivots: (S1) 110.58; (P) 110.78; (R1) 111.04; More...

USD/JPY's rebound from 109.71 extends today and break of 110.95 suggests that pull back from 112.13 has completed already. Intraday bas is back on the upside for retesting 112.13 first. Decisive break there will resume whole rise from 104.69 to 114.54 key resistance next. On the downside, below 110.53 minor support will turn bias back to the downside for 109.71 and possibly further to 38.2% retracement of 104.69 to 112.13 at 109.28.

In the bigger picture, while the rebound from 104.69 was strong, USD/JPY failed to sustain above 55 week EMA (now at 110.80), and was kept well below 114.54 resistance. Medium term outlook is turned mixed and we'll wait for the structure of the fall from 112.13 to unveil to make an assessment later. For now, more range trading is expected between 104.69 and 112.13 first.

Pivot (invalidation): 1.3045

Our preference Short positions below 1.3045 with targets at 1.2990 & 1.2955 in extension.

Alternative scenario Above 1.3045 look for further upside with 1.3080 & 1.3135 as targets.

Comment As Long as the resistance at 1.3045 is not surpassed, the risk of the break below 1.2990 remains high.

Pivot (invalidation): 1.1240

Our preference Short positions below 1.1240 with targets at 1.1210 & 1.1195 in extension.

Alternative scenario Above 1.1240 look for further upside with 1.1260 & 1.1285 as targets.

Comment The upward potential is likely to be limited by the resistance at 1.1240.

Daily Pivots: (S1) 1.3313; (P) 1.3379; (R1) 1.3417; More...

Intraday bias in USD/CAD remains mildly on the downside for 1.3250 support. Firm break there will indicate completion of whole rebound from 1.3068. In that case, deeper fall would be seen back to 1.3068/3112 support zone. On the upside, break of 1.3467 will resume the rebound from 1.3068 and target a test on 1.3664 high.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3210) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). However, firm break of the channel support should confirm reversal and target 1.2061 low again.

Rates: US eco data to mute or amplify growth worries?
US eco data are key this week with retail sales, (non-)manufacturing ISM's, durable goods orders, ADP employment and payrolls all up for release. We expect an asymmetric market reaction with core bond gains in case of weakness, but holding firm in case of strength, especially at the start of the week.

Currencies: EUR/USD to test the 1.12 bottom range?
The euro is well supported during Asian trading hours. Today's (US and EMU) data however might trigger a test of the EUR/USD bottom range at 1.12. We maintain the view still that there is no reason for the couple to break through the downside sustainably as any dollar reaction on a positive (US) surprise is probably short-lived.

The Sunrise Headlines

• US equity markets closed last Friday's trading session with gains up to +0.82% (DJI). Asian equities are all trading higher this morning with Chinese bourses (+2.5%) outperforming on stronger-than-expected Chinese manufacturing PMI's.
• UK Parliament will again take a vote on several Brexit options today after PM May's deal was voted down for a 3rd time on Friday. PM May is said to prepare an alternative, possibly trying to put her deal for a 4th time to a vote.
• Turkish president Erdogan's ruling party (AKP) has lost regional elections in the capital city Ankara and in many key Mediterranean coastal cities, but the AKP-led alliance remains the biggest Turkish party with over 50% of the vote.
• China's State Council said it would continue to suspend the additional tariffs on US vehicles and auto parts, following the US decision to delay tariff hikes on Chinese imports. Trade talks continue this week in Washington.
• US President Trump threatened to close the Mexican border if Mexico doesn't stop illegal immigrants from reaching the US. Trump has also cut aid to Central American countries that he accused of purposely sending migrants to the US.
• China's Caixin Manufacturing PMI rose to 50.8 in March, up from 49.9 a month before and above expectations (50.0). Japanese Q1 Large/Small manufacturing Outlook disappointed and posted its worst quarterly performance since 2016.
• Today's eco calendar contains US retail sales (Feb). The ISM Mfg index (Mar) is printed in the US, UK, Norway, Spain and Sweden. The EMU releases consumer inflation data (Mar). The UK Parliament holds a 2nd round of indicative votes.

Currencies: EUR/USD To Test The 1.12 Bottom Range?

EUR/USD to test 1.12/15 bottom range?

EUR/USD's downtrend continued on Friday. The couple recouped early losses following again mixed EMU data but couldn't lock in gains as another defeat of May's brexitdeal caused nasty spillovers to the common currency. At the same time, dollarbulls shrugged off slighty weaker but outdated spending and inflation data, instead clinging on surprisingly strong housing data and a better then expected (final) U. of Michigan consumer confidence. EUR/USD entered the weekend slightly lower at 1.1218 (down from 1.221) amid a constructive risk sentiment. USD/JPY finished at 110.86 (from 110.63).

Asian markets thrive this morning. China's official manufacturing PMI confidence (50.5) beat estimates (49.6) by quite a margin, a recovery later confirmed by the private Caixin PMI (50.8 from 49.9). The data eased concerns about slowing global growth. Risky assets, Chinese in particular, are well supported. The euro is a usual beneficiary of positive trade/growth related news. EUR/USD jumped higher to 1.124 area. The (trade-weighted) dollar (DXY) dips below 97.2. USD/JPY's risk-on uptrend halted near 111.20 before retracing some of the profits despite Japan's Q1 Tankan (manufacturing) survey printed below expectations.

In today's economic calendar the US takes centre stage. Retail sales are expected lower (core 0.3%) following January's stark recovery. We see upside risks given the unabated consumer confidence. The ISM manufacturing is expected to climb to 54.5. We side with consensus as a steep increase after a partial weather-related decline in February is probably capped by the overall growth slowdown concerns that recently reached the US. Nevertheless, any dollar reaction in case of a positive surprise might remain muted, especially in the run-up to Friday's closely watched March payrolls data. Risks to EMU headline inflation (1.5% expected) are tilted to the downside. EUR/USD drifted close near the recent lows of the 1.12/1.15 MT range. Today's data might trigger a test of the range bottom but we maintain the view that there is no compelling reason to break below the 1.1187/1.12 support sustainably. The pound gained in the run-up to May's third try to push her deal through Parliament last Friday, but the vote resulted in yet another defeat. Sterling took a hit and slipped back to EUR/GBP 0.86. Today the second round of the parliamentary ‘coup' takes place. MP's will vote on a brexit'shortlist' but it remains to be seen whether this will break the brexit stalemate. We remain cautious on sterling long exposure as long as there is no indication on how this process will turn out.

EUR/USD: drifted lower in the 1.12/1.15 range. Today's data might trigger a downside test

There is a lot of optimism and feelings of joy among investors today. Thanks to the Chinese economic data which has painted a very optimistic picture. The Chinese factory PMI number moved back in the expansion territory with the reading of 50.5 from its previous number of 49.2. This was the largest gain since 2012. Perhaps, trade war pessimism has finally started to fade away.

This wasn’t the only good news out of China which is pushing the markets higher in Europe today. The Caixin manufacturing index also posted a strong reading of 50.8, well ahead of the forecast, marking the strongest reading since July last year. It is this optimism that we are seeing a strong start for the equity markets today which comes on the heels of strong Q1 performance. To put things in perspective, the S&P500 index experienced its best quarter since 2009, up whopping over 13 percent.

Year to date, the S&P 500 index is up 13.07%, the Nasdaq 16.49% and the Dow Jones has gained 11.51%. In Europe, the Stoxx600 index has climbed 12.27%, the Dax 9.16% and the CAC40 index is leading the gains, up nearly 13.10%. The strength of the risk off sentiment can be witnessed by looking at the performance of VIX index which is down -46% and the VSTOXX index lost nearly -35%.

In terms of currencies, it is mainly about two currencies today: Turkish Lira and the British pound. Over in the UK, Theresa May's plan was shot down last week however, the prime minister is still weighing to bring the vote back in the parliament for the fourth time after three consecutive humiliating losses. The disarray in her own party over her choice of the Brexit deal is still substantial and the reality is that she is willing to risk everything, including the future of the UK, to get her version of Brexit deal approved. Less than two weeks are remaining before the UK crashes out of the EU without any deal but it seems like the politics in the UK is worse than the third world countries.

As for the Turkish Lira, Tayyip Erdogan has secured another important victory in the local elections but his control over two major cities Istanbul and Ankara has somewhat weakened. This factor drove the Turkish Lira lower against the basket of G10 currencies. At the time of writing this, the Turkish/dollar pair was trading at 5.62. Nonetheless, we are still well below the yearly high of 7 Lira per Dollar. Erdogan's victory represents more stability for the currency. Moving forward, his biggest challenges would be to drive growth in the country and navigate the economic ship away from the shores of economic recession.

General Trend:

• Chinese IT, Materials, Property and Telecom Services companies are among the early out performers
• Iron/Steel, Marine/Transportation, Electric Appliances and Machinery firms rise in Japan; Softbank gains
• Automakers and megabanks also trade broadly higher in Japan
• Printing companies rise in Japan as new imperial era is announced
• Japan Display rises over 11%, confirmed talks related to financing agreement
• Nikkei-weighted Fanuc rises over 3%, speculated to change CEO
• Pharmaceutical company Daiichi Sankyo rises over 9%, extends gains after recently announced collaboration agreement with Astrazeneca
• Taiwan’s Hon Hai rises over 9%, FY earnings beat ests
• Australia March NAB business confidence hits lowest level since 2015, RBA due to meet on Tuesday
• Australia March CoreLogic housing price index sees 18th straight m/m decline
• Turkish Lira (TRY) weakens after recent local elections
• China yuan denominated government bonds and policy bank bonds will be phased into the Barclays Global Aggregate Bond Index starting in April
• China Vice Premier Liu He is expected to visit the US in early April for trade talks

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.4%
• RIO.AU Update on Tropical Cyclone Veronica; guides FY19 iron ore production lower end of propr 338-350Mt
• (AU) Australia Mar CoreLogic House Price M/M: -0.7% v -0.9 prior (18th consecutive decline)
• WOW.AU Announces A$1.7B buyback, to use proceeds from sale of petrol business: Identified ~30 Big W stores for closure, Big W Q3 SSS +6%
• (AU) Australia sells A$700M v $700M indicated in 5.50% April 2023 bonds, avg yield 1.4064%, bid to cover 3.99x
• (AU) Australia Mar Melbourne Institute Inflation m/m: 0.4% v +0.1% prior; y/y: 2.1% v 1.7% prior
• *(AU) AUSTRALIA MAR NAB CONFIDENCE: 0 V 2 PRIOR (lowest reading since Mar 2015); BUSINESS CONDITIONS: 7 V 4 PRIOR
• (NZ) New Zealand Treasury: Businesses expect flat growth in 2019 as well as higher costs, tighter margins

Japan

• Nikkei 225 opened +1.4%
• (JP) JAPAN Q1 TANKAN LARGE MANUFACTURING INDEX: 12 V 13E (lowest since March 2017); OUTLOOK: 8 V 12E; LARGE ALL INDUSTRY CAPEX: 1.2% V 0.7%E
• (JP) Bank of Japan (BOJ) Official comments on Q1 Tankan Survey: Some firms said they were feeling impact of overseas economic slowdown
• (JP) Japan Mar Final Manufacturing PMI: 49.2 v 48.9 prelim (second consecutive contraction)
• (JP) Japan Bankers Association chairman Makoto Takashima: BOJ needs to carefully consider’ the economic impact of driving the short term rate further below zero as doing so would cause policy side effects to grow further – press
• (JP) Bank of Japan (BOJ) announces Bond purchases for month of Apr (unchanged m/m)
• (JP) Japan Cabinet announces the new imperial era for Japan to be called "Reiwa" meaning culture is born and nourished as people's hearts are drawn beautifully together
• 4911.JP Signs joint business plan with Alibaba; financial terms not disclosed
• 6740.JP Aiming to reach agreement on financing this week; aims for total capital increase of ¥110B with ¥60B-¥80B through issuance of stock and bonds

Korea

• Kospi opened +0.6%
• 102940.KR Has halted INVOSSA sales in South Korea - US financial press
• (KR) SOUTH KOREA MAR TRADE BALANCE: $5.2B V $5.1BE; Exports Y/Y: -8.2% v -6.9%e (4th straight decline); Imports Y/Y: -6.7% v -5.2%e
• (KR) South Korea Mar Manufacturing PMI: 48.8 v 47.2 prior; new export orders contract for 8th consecutive month, longest decline since 2015
• (KR) South Korea President Moon urges North Korea to respond to US requests for talks
• (KR) South Korea sells KRW840B v 850B indicated in 3-yr bonds, avg yield 1.710% v 1.895%; bid to cover 3.03x

China/Hong Kong

• Hang Seng opened +1.1%; Shanghai Composite opened +0.7%
• (CN) CHINA MAR OFFICIAL MANUFACTURING PMI: 50.5 V 49.6E (highest since Sept 2018, first reading above 50 since Oct); Non-manufacturing PMI: 54.8 v 54.3 prior
• (CN) CHINA MAR CAIXIN MANUFACTURING PMI: 50.8 V 50.0E (first reading over 50 in 4 months; matches highest reading since July 2018)
• (CN) China State Council said it will continue to suspend tariffs on US cars and auto part imports - financial press
• (HK) On Friday HKMA purchased HK$4.97B as Hong Kong dollar (HKD) traded at weak end of trading band - financial press
• (CN) EU Commission Presidential Candidate Weber: The EU should prevent Chinese firms from going on a "shopping spree" and protect strategic assets
• (CN) China PBoC Open Market Operation (OMO): Skips for 9th consecutive session: Net: CNY0 v CNY0 prior
• (CN) China PBoC sets yuan reference rate: 6.7193 v 6.7335 prior
• (CN) China to conduct coal mine safety inspections from April to June - Local Press
• (HK) Macau Mar Gaming Rev (MOP) 25.8B v 25.4B prior; Y/Y: -0.4% v -3.0%e

Other Asia

• (SG) Singapore Q1 Private Residential Prices q/q: -0.6% v -0.1% prior - URA

North America

• (MX) US President Trump reiterates threat to close the border with Mexico this week if Mexico does not immediately stop all illegal immigration to the US - tweets
• (US) President Trump tweet: Had the Fed not mistakenly raised interest rates, especially since there is very little inflation, and had they not done the ridiculously timed quantitative tightening, the 3.0% GDP, & Stock Market, would have both been much higher & World Markets would be in a better place!

Europe

• SWEDA.SE Retained the law firm Nordia as external counsel in relation to an initiated criminal investigation regarding inter alia aggravated swindling
• (EU) EU Juncker: We have had a lot of patience with our British friends over Brexit, but patience runs out; Would like UK to reach an accord over Brexit in the next hours/days - speaking to Italian press
• (TR) Turkey mayoral election results: Ruling party held on to most locations, opposition regained hold Istanbul and made significant inroads in other parts of Turkey
• (TR) Turkey President Erdogan: Will appeal election results where needed; Istanbul mayorship may have been lost but many municipalities were won; we stopped attacks against our economy and will strengthen economy against such attacks
• (EU) ECB Knot (Netherlands) said he expects euro zone economy to regain pace in the second half of 2019 - German Press

Levels as of 01:20ET

• Hang Seng +1.8%; Shanghai Composite +2.6%; Kospi +1.4%; Nikkei225 +1.4%; ASX 200 +0.6%
• Equity Futures: S&P500 +0.7%; Nasdaq100 +1.0%, Dax +0.7%; FTSE100 +0.4%
• EUR 1.1220-1.1241; JPY 110.88-111.19 ; AUD 0.7104-0.7128; NZD 0.6813-0.6835
• Commodity Futures: Gold -0.1% at $1,297/oz; Crude Oil +0.8% at $60.58/brl; Copper +0.9% at $2.96/lb

Market movers today

Today is a very busy day in terms of economic data releases. This morning, PMI manufacturing indices for many European countries, including Norway and Sweden (see overleaf), are due out.

In the euro area, we get unemployment data for February and preliminary HICP inflation at 11:00 CEST. Although we still expect core inflation to climb higher in 2019, we expect the March core inflation print to remain at 1.0% y/y, as the Easter effect will exert downward pressure on service price inflation, which might be even more pronounced following the methodological changes to German package tours. For headline inflation we see scope for a rise to 1.7% y/y, driven by increasing energy prices.

In the US, there are plenty of data releases as well. At 14:30 CEST, retail sales are due out, which will be interesting given the weakness in recent months. We expect core retail sales rose +0.5% m/m in February. At 16:00, ISM manufacturing for March is due out, which, given the regional PMIs, may increase marginally. US manufacturing is not immune to what happens in the rest of the world and we expect it to move lower over the next 3M.

In the UK, there will be another round of indicative Brexit votes today. Last week, a permanent customs union or a second EU referendum were closest to getting a majority.

Selected market news

Over the weekend and this morning, China published its official PMI and the Caixin PMI. Both indices surprised on the upside, with the official PMI rising to 50.5 from 49.2 last month, and the Caixin PMI rising from 49.9 to 50.8. It was the biggest increase since 2012 in the official PMI. Both new orders and new export orders rose to a six-month high though new export orders are still below 50. We believe we will continue see a rebound in Q2 data, that tends to correlate with commodity prices, and we have seen higher prices for both metals and oil this year. Hence, the PMIs are encouraging. We also expect further monetary easing to add to the stimulus and thus support activity in Q2. The better PMI data came after positive news stories last week that the Chinese-US trade talks are moving forward. We published our China Weekly Letter on Friday, where we argued that we could see a 'signing meeting' between Xi and Trump in late April.

The Asian markets have reacted positively to the growth news and the major equity indices are in green. USD/JPY is also higher, trading above 111, and 10Y US treasury yields opened some 3bp higher at 2.43%. In Turkey, Erdogan and his AK party lost several key cities in Sunday's election, and the lira remains under pressure after last week's turmoil.

Finally, on Brexit, EU's Junker warned over the weekend that the EU's patience will not last forever. The voting continues this week in the UK parliament. The government must now make a request to the EU at the extraordinary summit on 10 April or leave with a hard Brexit on 12 April.