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'They've worked really hard over the past five years to turn deficits into surpluses and when you've got money in the bank it gives you options.' - Cameron Bagrie, ANZ

The government of New Zealand stated it would run a bigger-than-initially-expected budget surplus this year amid additional investments in infrastructure. The government estimated a NZ1.62M surplus in the year to June, compared to its prior projection of a NZ$473M surplus. The Finance Minister Steven Joyce reported that the government would spend extra NZ$11B on infrastructure, including housing, roads, railways and prisons over the next four years. Apart from that, the government said it would spend NZ6.5B to support families through increasing grants and reforming some taxes. The following move is expected to provide support to the current government ahead of the 2018 National Election. New Zealand is also expected to run a trade surplus of NZ$2.85B in the year to June 2018. Meanwhile, the Treasury revised up its economic growth forecast from 3.4% to 3.7% amid the recent rebound in dairy product prices and improving tourism. The Finance Minister also said that the government would invest additional money in the nation's disaster fund, following massive earthquakes Christchurch and Kaikoura.

'It was supposed to be a year of risk that could lead to a break up of the euro. It's turning out to be the best year in a decade for the shared currency.' – Stefania Spezzati, Bloomberg

Pair's Outlook

On Thursday morning the common European currency was continuing the surge against the US Dollar. The surge began during Wednesday's trading session, when the currency pair remained at a resistance cluster in the expectations of fundamental news from the US Central Bankers. If the pair continues the surge, it is highly likely that after some struggling with weak resistance levels the currency exchange rate will surge to the 1.13 mark. There it will be most likely paused by the weekly R1, which is located at the 1.1306 level.

Traders' Sentiment

SWFX traders have 60% of open positions short, and that same percentage of all trader set up pending orders is set to sell the pair.

'There is still scope for further upside in the near term. The long-term downtrend currently stands at approximately 1.35 and it is still possible that we could see that tested before the dollar begins to reassert itself.' – Charles Stanley (based on PoundSterlingLive)

Pair's Outlook

Even though the Cable failed to behave in accordance with expectations yesterday, the consolidation trend still remained intact. Overall, the situation did not change since Wednesday, as the Pound is still required to experience another leg down in order for the trend to continue its existence. The same supports and resistance are in play and technical indicators keep suggesting the GBP/USD pair is to appreciate, meaning that a bullish development is also more than possible, which would, this time, fully break the consolidation trend. However, solid gains beyond 1.3030 are also doubtful due to the absence of a strong market mover.

Traders' Sentiment

There are 52% of traders being short the Sterling against the US Dollar today, while the portion of buy orders inched down from 56 to 52% in the last 24 hours.

'The rise in Treasury yields is supporting the dollar. It appears that speculative buying of Treasuries has run its course, with Trump concerns and geopolitical risks no longer fresh news.' – Daiwa Securities (based on Reuters)

Pair's Outlook

The US Dollar weakened against the Yen on Wednesday, but managed to avoid serious losses by closing at 111.50. However, further bullish potential is now under question, as the 55-day SMA and the weekly pivot point are once again acting as an immediate supply area. A drop back under 111.00 is always possible, due to lack of supports around that area, leaving the monthly PP at 110.48 as the only possible turnaround point unless losses exceed 150 pips. Technical indicators are unable to confirm the possibility of either the negative or the positive outcome, thus, we should not rule out the chance of another leg up and the potential retake of the 112.00 mark.

Traders' Sentiment

Traders' sentiment remains bearish, with 57% of all open positions being short. Meanwhile, 52% of all pending orders are to buy the Buck.

'I do not think the market's view for two more rate hikes has changed following the release of the Fed meeting minutes.' – Helen Lau, Argonaut Securities (based on Reuters)

Pair's Outlook

As the FOMC Meeting Minutes did not change the opinion of the market participants in regards to US rate hikes this year, the bullion began to regain previously lost ground. However, somewhere around midnight the situation has slightly changed. During the early hours of Thursday's trading session the commodity price had slightly declined, as it must have encountered a smaller timeframe chart's resistance, which keeps the metal form jumping. However, it is most likely that the surge will resume and the 1,270 mark will be reached.

Traders' Sentiment

SWFX traders remain almost neutral, as 51% of open positions are short. However, 68% of trader set up orders are to buy.

Weekly
    •    Last Candlesticks pattern: N/A
    •    ime of formation: N/A
    •    Trend bias: Near term up

Daily
    •    Last Candlesticks pattern: Hammer
    •    Time of formation: 3 Feb 2016
    •    Trend bias: Up

EURGBP – 0.8583

The single currency only retreated to 0.8524 (just missed our long entry at 0.8520) before finding renewed buying interest there and the subsequent rally adds credence to our view that the rise from 0.8312 low is still in progress, hence bullishness remains for this move to extend gain to 0.8735 resistance, however, break there is needed to confirm early fall from 0.8788 has ended at 0.8312, bring retest of this level which is likely to hold on first testing due to near term overbought condition, bring retreat later.

On the downside, whilst initial pullback to 0.8600-05 cannot be ruled out, reckon the Tenkan-Sen (now at 0.8566) would limit downside and bring another rise later to aforesaid upside targets. Below said support at 0.8524 would risk test of the Kijun-Sen (now at 0.8513) but only a daily close below there would signal top is formed, bring further fall towards support at 0.8457. Looking ahead, a drop below this level would signal the rise from 0.8312 has ended, bring subsequent decline to 0.8400-10 and then test of indicated support at 0.8384. 

Recommendation: Buy again at 0.8580 for 0.8730 with stop below 0.8500.

On the weekly chart, as the single currency has maintained a firm undertone after recent rally above previous resistance at 0.8531, retaining our bullish view for the rebound from 0.8312 to bring further gain to 0.8700-10, however, as broad outlook remains consolidative, reckon upside would be limited to 0.8750 and 0.8788 resistance should remain intact, bring retreat later. A break of 0.8788 would bring test of previous chart resistance at 0.8857 but only a weekly close above there would signal an upside break of early established broad range has occurred.

On the downside, although initial pullback to 0.8600-05 cannot be ruled out, reckon the Kijun-Sen (now at 0.8581) would limit downside and bring another rise later. A weekly close below the Tenkan-Sen (now at 0.8524) would defer and suggest top is possibly formed, risk weakness to 0.8495-00 but a drop below last week’s low at 0.8457 is needed to add credence to this view, bring further fall to 0.8400-10, however, only a break of said support at 0.8384 would suggest the rebound from 0.8312 has ended instead, extend weakness to 0.8350-55 and eventually retest of 0.8312.

EUR/USD

Current level - 1.1230

The overall outlook remains bearish below 1.1300 hurdle, for a corrective pullback towards 1.1020 zone.  Crucial on the downside is 1.1160.

Profit-taking affects gold curbing silver and platinum

USD/JPY

Current level - 111.69

The bias is positive above 111.30 minor support, for a rise towards 113.00 area. Crucial on the downside is 110.85.

GBP/USD

Current level - 1.2986

break through the latter will challenge 1.3120.

Weekly

    •    Last Candlesticks pattern: Doji
    •    Time of formation: 20 Feb 2017
    •    Trend bias: Up

Daily

    •    Last Candlesticks pattern: Doji
    •    Time of formation: 1 Sep 2016
    •    Trend bias: Near term down

EUR/CHF – 1.0973

The single currency did find renewed buying interest at 1.0865 last week and staged the anticipated rebound, however, as the pair met resistance at 1.0949 earlier this week and has retreated, suggesting further consolidation would be seen but said support at 1.0865 should limit downside and bring another rise later, above 1.0949 would signal the pullback from 1.0988 has ended, bring test of 1.0960, break there would suggest upmove has resumed for retest of 1.0988, then towards previous resistance at 1.1001. Looking ahead, only a break there would retain bullishness and encourage for headway to 1.1050-60, then 1.1100, having said that, price should falter below another previous resistance at 1.1201.

On the downside, expect pullback to be limited to 1.0900 and said support at 1.0865 should hold, bring another rise later to aforesaid upside targets. Below 1.0845-50 would defer and suggest top is possibly formed at 1.0988, bring test of support at 1.0792 which is likely to limit downside, bring rebound later. A daily close below this support at 1.0792 would abort and signal top is formed, bring subsequent fall to the upper Kumo (now at 1.0726) but support at 1.0671 should remain intact, the single currency shall stage another rebound from there.

Recommendation: Hold long entered at  at 1.0865 for 1.1065 with stop below 1.0765.

On the weekly chart, although euro rebounded from 1.0865 to 1.0949 last week, the subsequent retreat after faltering below last week’s high at 1.0960, suggesting minor consolidation would take place, however, reckon said support at 1.0865 would limit downside and bring another rise later, above 1.0960 would signal pullback from 1.0988 has ended, bring retest of this level, break there would extend recent upmove from 1.0631 to previous resistance at 1.1001, a sustained breach above this level would signal the fall from 1.1201 has ended, bring further gain to 1.1100 and possibly test of resistance at 1.1129 but price should falter below said recent high at 1.1201, bring retreat later. 

On the downside, expect pullback to be limited to 1.0880-82 and said support at 1.0865 should hold, bring another rise. Below the lower Kumo (now at 1.0848) would risk test of the Tenkan-Sen (now at 1.0822) but break of the Kijun-Sen (now at 1.0810) is needed to suggest top is possibly formed, bring further fall to 1.0792 support, once this level is penetrated, this would add credence to this view, bring subsequent weakness towards 1.0725-30 but support at 1.0656 should remain intact, bring another rally next month.

Cable stood on the front foot in Asia on Thursday and extended recovery from Wednesday's low at 1.2926, hitting session highs near 1.3000 barrier.

Sterling was supported by rather dovish tone from Wednesday's FOMC minutes that kept the greenback in defensive. Despite strong expectations for firmer signals about rate hike in June, Fed showed more cautious approach, although supporting gradual rate hikes, but looking for more evidence that recent economic slowdown was temporary.

Overall, the dollar may stay under pressure which was initiated by recent political turmoil in the US and softer than expected tone from Fed.

Sterling is showing signs of recovery after correction from repeated rejections above 1.3000 barrier found footstep above strong supports and first triggers at 1.2954/38, provided by rising 10/20SMA's that started to diverge.

Bullish setup of studies on daily chart is supportive but the price is still struggling to clearly penetrate thick weekly cloud that acts as strong barrier and weighs on near-term action.

However, pound is still showing negative impact from Manchester terrorist attack on Monday that may, along with politics in pre-election period, extend hesitation of broader recovery phase from 1.1950 zone.

Today's focus turns on UK Q1GDP and Business investment data which may provide fresh signals.

Forecasts for GDP are unchanged (0.3% q/q and 2.1% y/y) while Business investment is expected to rise by 0.2% in Q1, compared to -0.9% in Q4 2016.

The pair needs firm break through either of 1.2900/1.3000 boundaries for firmer direction signal.

Res: 1.3000, 1.3033, 1.3046, 1.3087
Sup: 1.2964, 1.2955, 1.2938, 1.2901

The Euro extended post-Fed recovery on Thursday and bounced to 1.1250 zone, after correction from fresh high at 1.1268 was contained by 4-hr Kijun-sen at 1.1167. Dovish tone from Fed kept the dollar pressured that boosted the single currency, offsetting so far negative signals on overbought daily studies and bearish outside day on Tuesday. Lack of economic indicators from the Eurozone today suggests that the pair will be depending on US data and technicals. Break above multi month high at 1.1268 is needed to signal fresh upside, with such scenario being favored as the dollar stands at the back foot. Hhowever, extension above 1.1299 (09 Nov post-US election high) is needed to confirm bullish resumption. Initial support lies at 1.1210 (session low, followed by 1.1167 (correction low / Fibo 23.6% of 1.0839/1.1268 upleg) and rising 10SMA at 1.1133. Reversal of slow stochastic from strongly overbought zone requires caution as fresh weakness below 1.1167/33 pivots would signal stronger pullback.

Res: 1.1268, 1.1299, 1.1322, 1.1370
Sup: 1.1210, 1.1167, 1.1133, 1.1104