Your weekly fundamental view 2016.04.11

Avril 11, 2016 09:17

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Need to know

China Balance of Trade data , Eurozone CPI and US industrial production are among this week's key releases.

Coming up

On Wednesday 13 April we will get Chinese Balance of Trade data for March. Both Chinese imports and exports have declined in 2016. That fall may have been seasonal to date. However a further dip would be problematic and could signal a genuine downtrend. Why should traders care? The PBOC is trying to stimulate the Chinese economy. Trade data should show us if that's working. When China sneezes the world may catch a cold. Watch the China A50 Index support 9490: resistance 9822

On Thursday 14 April we will get Eurozone CPI data for March. The Consumer Price Index or CPI is one of several key Inflation metrics. Core CPI (ex food and fuel) picked up nicely in February, but the broader measure of CPI still remains too close for comfort to the zero bound. Why should traders care? Inflation growth could suggest that ECB stimulus is working and that the Eurozone economy is recovering at long last. Watch EUR USD support 1.1320: resistance 1.1440

US industrial production data for March is released on Friday 15 April. Industrial recessions in the USA have been a precursor to a wider economic downturn in every year save one, since 1950. Why should traders care? Six out of the previous nine readings for this data have been negative numbers. US economic weakness may keep the Fed on hold. Watch Dollar Index (USDX) support 93.68 : resistance 94.60


Chart to watch: USD/JPY weekly

Dollar/Yen has remained below 114.41 for some six weeks and it has moved firmly below the uptrend line drawn from the June 2013 lows on the chart above. Further weakness in the pair (Yen strength) showed itself in last weeks move below 110. That number was seen as a line in the sand that the BOJ would defend (sell yen at). But they have so far been absent from the market. Whilst I believe the Yen can make further gains, I note that Dollar/Yen has often respected the oversold boundary of 30 on the RSI10 (see the lower chart above) and may do so again in the short term.