MNI China Daily Summary: Friday, April 26

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MNI: BAKER HUGHES US RIG COUNT 613; OIL RIGS 506; GAS RIGS 105

MNI: UNIV OF MICHIGAN CONSUMER SENTIMENT FINAL APR INDEX 77.2

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MNI: Growth Drag From Net Zero Carbon Goal Can Be Offset-OECD

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USD Index Paring Gains Following Fed Skip Rhetoric, Euro Weakness Prevails

FOREX
  • Early price action across currency markets on Wednesday assisted the USD Index to new multi-month highs on the final trading day of May. However, late comments from Fed’s Jefferson and Harker seemingly advocating for a Fed pause in June have taken the shine off the greenback in late US trade.
  • Worth noting that the DXY turnaround has coincided with the index briefly testing resistance at the 76.4% retracement for the March - April downleg, crossing at 104.68. Progress through here would open the best levels since early March for the index.
  • Softer European CPI prints over the past two days continue to place downward pressure on the single currency. EURUSD plumbed fresh lows as the European session came to an end and technical indicators continue to point to short-term downside momentum extending. Immediate levels to watch are 1.0631 and 1.0608, the March 20 and 17 lows respectively. Below here would open the March lows at 1.0516.
  • The lower yields have also assisted EURJPY lower, with the pair currently down 0.95% approaching the APAC crossover, having broken a cluster of old lows between 148.72/85. This may prompt some further pressure on the pair which has come into focus following this week’s sharp turnaround from the 151 handle. Overall, the EURJPY move is considered corrective for now, with the 50-day EMA, which intersects at 147.43, remaining intact and a key support.
  • EURGBP (-0.75%) has printed another fresh 2023 low Wednesday, marking a fourth consecutive session of lowers lows. The 14day RSI for the cross is on the cusp of becoming technically oversold for the first time since March 2021 - and bearish developments in the moving-average space also signal short-term downside momentum: the 50- and 200-dmas are on the verge of forming a death cross (50-dma < 200-dma).
  • Focus shifts to German retail sales on Thursday morning before the final manufacturing PMI reads for May. Attention will then be on the Eurozone Flash estimate of CPI which is expected to come in at 6.3% Y/y. This will be the final read before the June 15 ECB meeting. US ADP and the ISM Manufacturing PMI highlight the docket before Friday’s key employment report.
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