Today’s focus turns to US PPI

It’s clearly obvious after yesterday’s trading that the market is clutching at straws and running with even the most fickle news.

The move lower in the USD was put down to ‘ongoing trade tensions’ even though no tariffs have been put in place yet.

Meanwhile, the Euro was up 60 pips against the USD after ECB President Mario Draghi said “A slide in stock markets this year has not materially impacted the eurozone financial conditions”, suggesting that policymakers remain calm about the recent market volatility.

While Draghi’s comments were not materially a surprise, analysts said the move in the Euro may have been exaggerated in a thin market which is expecting some more clarity on the trade war front when President Xi Jinping speaks at the Boao Forum for Asia in the southern province of Hainan on Tuesday.

Sterling climbed against the USD and the Euro, boosted by data showing British house prices rose more than expected in March. Sterling was up 80 pips at one stage hitting a high of 1.4164.

The Loonie rose against its U.S. counterpart following the release of a report by the Bank of Canada that said Canadian companies remain optimistic about sales growth despite trade uncertainties, reinforcing expectations of further interest rate hikes down the line.

Don’t expect a lot today – as the economic calendar is pretty bare

The markets are still being driven by the remnants of fickle geopolitical issues & that’s creating sideways non-directional moves.

The North American session remains the key session with US equities the primary driver of the USD.

After observing yesterday’s moves I’m more inclined to start looking at ‘false break’ trade set ups. They appear to be occurring across all the majors.

Also, keep an eye on the JPY crosses as they will be the main trading pairs whilst the ‘safe-haven trade’ remains in play with China & the US yet to agree on any solid measures.

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

We have a few low tiered data releases in the Asian session but nothing to get excited about.

Of more importance is China’s President Xi Jinping speech at the Boao Forum for Asia in the southern province of Hainan today.

This will be the first opportunity to hear directly from the Chinese President regarding the US trade tariffs. Keep a close on the Nikkei & USDJPY.

European Session

There’s absolutely nothing coming out during the European session so traders will be on hold waiting for the North American session.

I’m sure Draghi didn’t want to drive the Euro higher so keep an eye out for a correction of his comments yesterday.

North American Session

US PPI & Canadian Housing data will be the major economic data focus for the day.

Unfortunately, I expect the geopolitical issues to dominate these releases BUT in the chance that nothing comes up the PPI has good potential.

It’s another key ‘inflation’ indicator so it does matter in the big scheme of things.

Follow the US equity indices for moves on the USD.

Technical Set Up – What’s Happening with the Majors

Check our Daily Analysis for detailed analysis of the Major currency pairs.

Today’s Fundamental Drivers

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Brad