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.
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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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