Markets mixed to lower ahead of Easter
Following a mixed session yesterday with terrible attacks on Brussels and some uneventful macro data (besides from upbeat Euro zone PMIs), the markets seem to being holding back a tad. In the Asian session, indices traded in fairly tight ranges and the AUD and JPY both lost ground against their peers. Oil fell following a build in inventories, but upside still looks attractive. Gold is also on the offer with a short term downtrend being established on a daily chart. Benchmark yields have traded slightly higher post the FOMC last week.
The opening of the European session this morning has followed the same trends with a general USD appreciation and additional weakening of the Sterling on back of the report from Moody’s yesterday which concluded a major economic impact should the UK decide to leave the European Union. Looking at EUR/GBP, the pair has been pushing higher since early December 2015 and is closing in on the 2016 highs at 0.7929. Although the pair has been in a decent uptrend, there are no clear signs of it being overbought or showing divergence in the technical oscillators, which could signal a reversal.
On the macro front today, we saw Swiss ZEW expectations turning positive following two months in negative territory. This triggered some action in the otherwise not very volatile Swiss France (post the removal of the EUR/CHF peg). US figures at 15:00CET will be the main event of the day, and markets are expecting a 3.2% monthly increase in the New Home Sales for February. The Existing Home Sales dropped 7.1% (vs. an expected drop of 2.2% ) on Monday, so this figure will definitely attract some attention. There has been a pick-up in Housing Starts in February and the US Housing Market is overall still considered to be in recovery mode. For USD-pairs, should the figure be better than expected, we are likely to see additional pressure for higher yields, which should send the USD on the bid. In EUR/USD, the pair has posted “three black crows”, which is a reversal-pattern, but it is not a classis textbook case. Although we are overall bearish on the USD, we could see additional downside in the pair towards the 61.8% fibo retracement in recent wave at 1.1160-area.
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