China and Japan give risk a boost

The Chinese HSBC manufacturing PMI data showed that modest stimulus measures had improved factory output as the sentiment number rose to a six-month high of 49.7, versus the 48.1 expected. In the FX space AUD was the main beneficiary, rallying to 0.9270 as the 0.9200 support level held firm.

The Nikkei led the charge in equities, up 2.1%, following on from a stronger US session attributed to the FOMC minutes. I think WSJ journalist and Fed watcher Hilsenrath sums it up perfectly with ‘lots of talk and no action’. JPY weakened with a stronger Nikkei as the technical picture now changes. The 2014 low of 100.75 held yesterday, aided by rumours that Japanese Post Insurance plans to boost investment in Japanese equities by 50% this year.

Sterling continues to push higher and back above 1.69 following the strongest retail sales reading in 10 years. MPC minutes had the market assessing the real possibility of a rate hike this year as the FT say a rate hike is now inevitable, with the only question being when as committee members revealed that the ‘policy decision was becoming more balanced’.

European Parliamentary elections being held today will be watched for the performance of anti-European parties as PMI data from the EU is released. We get the second release of the UK GDP number at 9.30am as the US session brings us PMI and home sales data.

EUR/USD

Supports 1.3635-1.3580-1.3500 | Resistance 1.3740-1.3780-1.3830

USD/JPY

Supports 101.30-100.75-100.00 | Resistance 101.80-102.00-102.30

GBP/USD

Supports 1.6830-1.6770-1.6730 | Resistance 1.6930-1.7000-1.7045