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  • USD

    The dollar rose on Tuesday after higher-than-expected inflation data increased the possibility that the Fed might tighten its ultra-loose monetary policies earlier than previously thought. CPI in March showed rise of 1.5% y/y, beating expectations of a 1.4% rise – and smashing the previous year’s 1.1%. Month-on-month CPI rose 0.2% in March versus the 0.1% traders had priced in. CPI excluding volatile elements such as food and energy also rose by 1.7% in March from 1.6% previously, proving the inflation was not due to increases in commodity prices alone. Ex food and energy also beat expectations on a month-on-month basis after coming out at 0.2% versus forecasts of 0.1%. Commentary from Janet Yellen focused exclusively on the implementation of Basel capital controls and she did not discuss monetary policy. Other data showed a lower-than-expected result for Manufacturing in New York of 1.3 versus the 8.0 investors had been looking for.

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  •     The aussie has sold off this morning, falling in another leg lower. The exchange rate has broken back inside its rising channel. Despite this temporary weakness the short-term up-trend is still intact and expected to rise higher. There is a possibility today’s move down is the C leg of an A-B-C correction which will soon complete and lead to a resumption of the up-trend. Support at 0.9343 could provide one place where the exchange rate might stop falling and rotate. A break above the 0.9394 peak highs would probably lead to a rally up to the former highs at 0.9460.

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  • The long rally up from mid-2013 looks like it could be dying out. On the weekly chart MACD has moved below its signal line indicating a possible start of a wave down. The recent failure high on the 10th April is also a bearish sign. The very short-term trend is in doubt however – could be up; could be down – so price action is withholding its cue. This morning there was a sharp sell-off down to 1.6657, but afterwards there was a recovery which formed a very long-tail hammer. Once again short-term action was ambivalent. A break below 1.6670 would signal a possible resumption of the short-term bearish trend to 1.6620, and possibly a broader sell-off, in line with the aforesaid signs.

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  • Markets4you Daily VideocastThe euro fell on Monday after Mario Draghi suggested the ECB should use more monetary stimulus if the euro carried on strengthening. The single currency ended the day at 1.3820 to the dollar and 140.74 to the yen. Today’s data includes the euro-zone Trade Balance in February, which is expected to come out at 15.0bn from 14.1bn previously, as well as the euro-zone ZEW survey, which is also expected to show a rise.

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  • Fundamentals reasons for a strong position of the New Zealand currency are rather clear:

    • Monetary tightening launched by the Reserve Bank of New Zealand (RBNZ) in March.
    • High growth rates of the New Zealand economy (1.4% q/q and 3.5% y/y in the third quarter of 2013; 0.9% q/q and 3.1% y/y in the fourth quarter of 2013). Technically, New Zealand GDP continues the uptrend since 2009.
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  • Forex Technical Analysis
    The NZD/USD consolidates at the support level of 0.8630.

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  • Forex Technical Analysis

    The AUD/USD came close to the uptrend line of 0.9375.

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  • Forex Technical AnalysisThe USD/JPY is slowly reversing up.

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  • Forex Technical Analysis

    The GBP/USD is slowly retracing down.

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  • Although Draghi’s comments yesterday triggered a sell-off, he made it clear that ECB would only take action if the euro went higher. The weekly chart still looks very bullish with that long engulfing candle last week, and it is above the 2008 major trend-line. On the daily chart too, yesterday’s gap-down looks more like a pull-back rather than a reversal. There is a possibility the EUR/USD will start to turn around, particularly with Janet Yellen speaking later today and her propensity for doveish messages.

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