Originally published by AxiTrader
Markets Overview:
- Equities: Nikkei (-0.32 %), Hang Seng (+0.08 %), CSI 300 (+0.81 %), KOSPI (-0.10 %), S&P/ASX 200 (-0.10 %)
- Commodities: WTI Crude $48.14 (-0.10 %), Brent Crude $50.06 (-0.12 %), Natural Gas $3.07 (+0.99 %), Gold $1291.99 (-0.19 %), Copper $255.20 (+0.20 %)
What traders are talking about:
Australian economic growth slowed sharply in Q1. GDP increased only 0.3 % quarter-on-quarter and 1.7 % year-on-year, with the biggest detractors from growth being exports and housing investment. While the figures were disappointing and undershot the RBA's expectations, they were slightly less worse than the market anticipated. That was enough for the Australian Dollar to appreciate overnight.
AUD/USD rallied from 0.75 to a high of 0.7544 so far. While it managed to clear resistance at 0.75, traders should wait for a confirmation through a daily close above the level. However, expect solid resistance in the area between 0.76 and 0.7620.
Other than that, markets remained fairly quiet as traders are preparing for high volatility tomorrow. Along with the UK election, the ECB will decide on interest rates and former FBI Director Comey will testify about his talks with US President Trump.
Gold and the Japanese yen should stay well bid ahead of these key risk events, while stock markets in Europe are likely to have a mixed performance again.
Gold is approaching a key resistance level at $1300. While it lost momentum overnight, a breakout seems quite likely in the near-term. Above $1300, the next notable resistance level lies at $1337 (November 2016 high).
USD/JPY has found some support ahead of 109. Nevertheless, selling rallies is still the preferred strategy. Expect solid resistance at 110.00, followed by the former support area at 110.40/50.
Meanwhile, EUR/USD is likely to remain in a rather tight range ahead of the ECB meeting tomorrow. The market is not expecting any changes in rates or size/duration of the QE programme. However, there are some hopes that the team around ECB President Draghi will be more optimistic, and signal a change of direction soon.
The expectations of the market might be a bit too high, though. Inflation remains low in the Euro Zone area, and the ECB is unlikely to risk sounding too hawkish. Given that EUR long positions are at the highest level since 2011, and EUR/USD is looking fairly overbought in the near-term, there is risk of a correction.
Euro Zone Core CPI - Source: TradingEconomics
CFTC EUR Positioning - Source: COTBase.com
Key Events: Euro Zone GDP, US Crude Oil Inventories