Strong Australian employment data gave AUD/USD a boost this morning, moving higher to challenge 0.720 again. 25.7k new jobs were created last month, smashing the forecast of 13.7k. An improving job market, alongside with upbeat China data released yesterday are working together to recede the fear of recession.
Technically, its 4-hour chart has formed an ascending channel with consecutive higher highs. Immediate resistance level can be found at 0.720 and support at around 0.716 (lower bound of the channel).
The offshore yuan surged to its highest level seen in nine months, backed by better than expected China data released yesterday – 1Q GDP, Industrial production and retail sales. USD/CNH fell around 300 bps from a day ago to 6.684 this morning, hitting a 38.2% Fibonacci Retracement level at 6.687. The trend has turned bearish for USD/CNH since Nov 2018, following the US-China trade truce. Since then China policymakers have pushed through simulative policy measures to shore up domestic growth. Revitalised macro data in March will pave way for the yuan’s strengthening in the weeks to come, in line with what technical indicators are suggesting.
US equities retraced from this year’s high, dragged by healthcare (-2.89%) real estate (-0.99%) and materials (-0.61%), which offset gains in the information technology (+0.58%) sector. Earnings were mixed last night. Morgan Stanley’s earnings beat expectation, and its CEO painted a positive outlook, which boosted its share price by 1 percent. IMB, however, fell 4 percent as it reports decline in revenues and the outlook remains challenging.
Singapore’s benchmark index STI outperformed regional peers, hitting eight-month high of 3,347 points. Improved China data helped to underpin weakness in domestic NODX reading, which fell 11.7% in March due to heavy decline in electronic sector (-26.7% yoy). Investors believe that the worst is probably behind us, and the economy could rebound some time in 2Q as demand from China will likely pick up.
From a technical perspective however, global equity indices have entered into an overbought zone and may face some technical correction.
Earnings are still the biggest market mover for these few weeks. On the macroeconomic front, today’s Eurozone PMIs, UK retail sales and US weekly unemployment claims report are also key factors dominating sentiment.
Brent oil prices retraced to US$71.7 area from a key resistance level at 72.5% (61.8% Fibonacci Retracement), despite data showing that US commercial inventory fell by 1.39 million barrels last week.