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Currencies at the Mercy of Risk Sentiment Swings into the Weekend

Currencies at the Mercy of Risk Sentiment Swings into the Weekend

2016-04-22 06:36:00
Ilya Spivak, Sr. Currency Strategist
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Talking Points:

  • FX markets in corrective mode overnight after risk-off day on Wall St.
  • Eurozone PMI figures may shape global growth bets, sentiment trends
  • Q1 corporate earnings results back in the spotlight into the week-end

The sentiment-linked Australian and New Zealand Dollars outperformed while the anti-risk Japanese Yen edged lower in Asian trade as markets retraced moves played out against the backdrop of risk aversion in Wall Street trade. Shares fell by the most in two weeks on Wall Street, dragging down commodity-bloc FX while the Yen rose amid liquidation of carry trades funded in terms of the perennially low-yielding Japanese unit.

Looking ahead, risk appetite is likely to remain the leading driver of price action. In Europe, the release of April’s preliminary Eurozone PMI figures is unlikely to materially alter ECB policy bets so soon after yesterday’s rate decision. A second consecutive month of firming manufacturing- and service-sector activity growth may boost confidence about global performance as a whole and lift sentiment, extending the recovery in risk-geared assets. News-flow out of the currency bloc has firmed relative to consensus forecasts early March, bolstering the case for upside surprises.

First-quarter corporate earnings results will re-enter the spotlight later in the day, with high-profile names including General Electric, Honeywell, American Airlines, McDonald’s and Caterpillar all set to release results. Traders will look to the results to gauge the global business cycle. Upbeat figures may encourage a risk-on mood, whereas disappointing ones could reboot risk aversion into the week-end. Thus far, sales and earnings growth have topped estimates by 0.3 and 3.82 percent respectively, with 119 of the firms in the benchmark S&P 500 index having reported.

Are FXCM traders bullish or bearish on the S&P 500? Find out here!

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

1:45

CNY

MNI Business Indicator (APR)

50.5

-

49.9

2:00

JPY

Nikkei Japan PMI Mfg (APR P)

48.0

49.5

49.1

4:30

JPY

Tertiary Industry Index MoM (FEB)

-0.1%

-0.5%

0.7%

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

Markit France Mfg PMI (APR P)

49.9

49.6

Low

7:00

EUR

Markit France Services PMI (APR P)

50.1

49.9

Low

7:00

EUR

Markit France Composite PMI (APR P)

50.2

50.0

Low

7:30

EUR

Markit/BME Germany Mfg PMI (APR P)

51.0

50.7

Medium

7:30

EUR

Markit Germany Services PMI (APR P)

55.1

55.1

Medium

7:30

EUR

Markit/BME Germany Composite PMI (APR P)

54.2

54.0

Medium

8:00

EUR

Markit Eurozone Mfg PMI (APR P)

51.9

51.6

Medium

8:00

EUR

Markit Eurozone Services PMI (APR P)

53.3

53.1

Medium

8:00

EUR

Markit Eurozone Composite PMI (APR P)

53.3

53.1

Medium

9:00

EUR

Eurozone Government Deficit (Q4)

-

-

Low

9:00

EUR

Eurozone Government Debt (Q4)

-

-

Low

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.1063

1.1191

1.1239

1.1319

1.1367

1.1447

1.1575

GBP/USD

1.4074

1.4214

1.4269

1.4354

1.4409

1.4494

1.4634

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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