MNI China Daily Summary: Friday, April 26

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EURUSD Slides Back below 1.0900 Amid Soft CPI & Recovering Greenback

FOREX
  • Higher US yields have contributed to a rebound for the USD index on Thursday. Softer headline US data was brushed aside with some firmer underlying details supporting the greenback. An additional bout of USD weakness around the month-end fix also proved short lived with the DXY close to session highs approaching the APAC crossover, up 0.75% on the session.
  • EURUSD hovers right at session lows as the single currency continues to be one of the worst performers in G10. The euro was initially undermined this morning by a series of lower-than-expected CPI prints from France and the Netherlands - releases which spelled downside risks vs consensus for the Eurozone CPI Estimate, which also came in below surveyed median forecasts.
  • The trend outlook in EURUSD remains bullish and the pullback from yesterday’s high is likely a correction. Note that the trend condition is overbought and a corrective pullback would allow this set-up to unwind. Initial support to watch is 1.0852, the Nov 22 low.
  • USDJPY had a volatile session with an impressive 166-pip range. An initial blip lower on the US data could only take the pair down to 147.24, well shy of the overnight lows and the powerful turnaround saw the recovery extend to as high as 148.51. The aforementioned greenback weakness around the WMR fix saw another dip to 147.72 before the pair recaptured the 148 handle approaching the close.
  • Elsewhere, the Swiss Franc extended on Wednesday’s advance, with another sizeable slide in EUR/CHF through the WMR fix, with no headlines or data to trigger the move in CHF specifically, leaving the move likely a result of month-end flow - nonetheless the EUR/CHF slippage puts the cross further through support of the 50- and 100-dmas of 0.9599 and 0.9592 and is narrowing the gap with key support and the bear trigger of 0.9417.
  • Worth noting CHF implied vols are bid, with spot volatility likely feeding into the gauges. The 2w implied EUR/CHF contract is particularly firm, with the contract capturing both the ECB and SNB decisions on December 14th.
  • Final Eurozone manufacturing PMI data are unlikely to move the dial, and greater focused will be placed on the US ISM Manufacturing PMI to round off the week. Worth noting ECB’s Lagarde is also due to speak at the ECB Forum on Banking Supervision, in Frankfurt.
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