Asian stocks mostly higher in lethargic trade; Nikkei up 0.20%

Most Asian bourses traded higher Tuesday amid some key data points, though trading was somewhat sluggish. 

In Asian trading Tuesday, Japan’s Nikkei 225 added 0.20% despiteUSD/JPY trading to the downside. Earlier, the Bank of Japan said prices of domestic corporate goods in Japan rose 0.3% in April, easily topping forecasts that called for a 0.1% increase. On a year-over-year basis, prices were flat, but that was better than the expected decline of 0.2%. 

Hong Kong’s Hang Seng rose 0.16%, but the Shanghai Composite slipped 0.66% a day after data showed that industrial production in China rose 9.3% in April, below expectations for a 9.5% increase and following an 8.9% rise the previous month. 

Separate data showed that retail sales in China increased by 12.8% in April, in line with expectations. Another report showed China’s oil demand slowed a bit in April. The country is the world’s second-largest oil consumer behind the U.S. 

Australia’s S&P/ASX 200 advanced 0.26%. Later Tuesday, Australian Treasurer Wayne Swan is set to deliver remarks about the country’s inability to return to a budget surplus. Swan has previously cited the strong Aussie as a reason for missing out on surplus expectations, but that excuse may be start to wear thin given the Aussie’s recent weakness. 

New Zealand’s NZSE 50 fell 0.12% even after Statistics New Zealand said real retail sales there rose 0.5% in the first quarter compared with a fourth-quarter gain of 1.9%. Including price changes, New Zealand retail sales rose 0.7%, but economists expected an increase of 1.1%. 

South Korea’s Kospi jumped 0.99% to be the region’s best performer as traders seemed compelled one of Asia’s laggard markets in 2013. 

Singapore’s Straits Times Index rose 0.39% while S&P 500 futures added 0.12% a day after the benchmark U.S. index finished little changed.

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Forex Trading Signal for 14 May 2013

                                                                                


Japan (Tokyo)                               United Kingdon (London)                        USA (New York)

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EUR/USD

Up Trend :

 (1) BUY

E/P: 1.29734

T/P: 1.30100

S/L: 1.29500

(2) BUY

E/P: 1.30049

T/P: 1.30300

S/L: 1.29700

GBP/USD

Down Trend:

(1) SELL

E/P: 1.53162

T/P: 1.52800

S/L: 1.53500

(2) BUY

E/P: 1.53198

T/P: 1.53400

S/L: 1.53500



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EURUSD: Broken Daily Trend-line puts The euro in Bearish Mode

EURUSD fell sharply last week and closed well below the 1.3034 swing low support which puts the bearish price action back in play. In fact, the decline from 1.3195 was very strong and sharp, which in many cases represents an impulsive wave and direction of trend.

As such, we need to respect this price action so we think it’s better to stick with the downtrend and look for possible short entries at this stage.

From an Elliott Wave perspective we are tracking a one-two, one-two set-up with sub-wave (ii) now underway to 1.3020/50 resistance area.

The reason why we also expect bearish price action to continue is a broken channel line on the Daily chart as shown below. We however would turn bullish again only if we pass 1.3130 level.

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Forex - Dollar gains on firming U.S. retail sales, soft Chinese data

The U.S. dollar rose against most major currencies on Monday after U.S. retail sales beat expectations, just days after official data revealed that far fewer individuals filed for unemployment assistance than expected.

In U.S. trading on Monday, EUR/USD was down 0.13% at 1.2974.

The Commerce Department reported earlier that U.S. retail sales rose 0.1% in April, defying expectations for a 0.3% decline. March's figure was revised down to a 0.5% contraction from a 0.4% contraction.

Core retail sales, which exclude automobile sales, fell by 0.1% last month, in line with expectations.

The numbers sparked talk that the Federal Reserve may be closer to scaling back stimulus programs, especially its USD85 billion monthly bond-buying program, which weaken the dollar to spur recovery.

Lingering optimism from stronger-than-expected monthly hiring data and weekly jobless claims reports bolstered the greenback as well.

Meanwhile in China, industrial production in the Asian giant rose 9.3% in April, below expectations for a 9.5% increase and following an 8.9% rise the previous month, which bolstered the greenback's safe-haven appeal.

The greenback, meanwhile, was up against the pound, with GBP/USDtrading down 0.53% at 1.5284.

The dollar was up against the yen, with USD/JPY up 0.33% at 101.95, and up against the Swiss franc, with USD/CHF trading up 0.10% at 0.9582.

The yen touched earlier lows not seen since October 2008 after economic policymakers from the Group of Seven industrialized economies refrained from criticizing Japan over policies that have resulted in a weaker yen.

The Bank of Japan has rolled out massive stimulus polices in recent months to steer the country away from deflationary decline, which have weakened the yen.

Wealthy G7 nations concluded at a U.K. summit over the weekend that such policies are designed to spur growth in Japan and are not out to give the Asian economy unfair advantages in global trade arenas.

The dollar was mixed against its cousins in Canada, Australia and New Zealand, with USD/CAD down 0.01% at 1.0106, AUD/USD down 0.73% at 0.9948 and NZD/USD trading down 0.72% at 0.8244.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.21% at 83.36. 

On Tuesday, the U.S. is to publish official data on import prices.

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Dollar Storm: GBP/USD Surrenders and Loses 1.54

One by one, currency pairs are breaking key levels or approaching them, after USD/JPY broke the 100 line. It’s now the turn of GBP/USD, that lost the 1.54 line.

In addition to the strengthening of the greenback, cable was also hit by a small disappointment in the trade deficit: it stood on 9.1 billion pounds in March, worse than 8.9 that was expected. UK indicators have mostly surprised to the upside recently, so it’s safe to say that the most of the move is due to the US dollar’s strength.

GBP/USD is now trading at 1.5392, after hitting a low of 1.5384 earlier. Just yesterday, the pair was challenging the stubborn 1.56 line that refused to surrender.

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Negative Deposit Rate Talk Continues – EUR/USD Falls

Italian ECB member Visco went on CNBC and said that he sees merit in negative deposit rates. He also mentioned that there are “unintended consequences” in such a move, but that the ECB has the ability to work on that. Cutting the rate could be effective for for the economy if it needs it, said Visco.

This is another confirmation that the ECB is not afraid of the negative effects, and that it sees such a move as advantageous. EUR/USD reacts with a retreat from the 1.30 line towards 1.2960.

Mario Draghi mentioned a negative deposit rate only when he was asked about it in the press conference. His openness, and especially his words about being able to handle the negative effects of a deposit rate sent the euro plunging. However, it was quick to recover within a day, especially as his fellow ECB member Nowotny somewhat distanced himself and said that he was surprised by the market reaction.

However, when Mario Draghi reiterated these words in the following week, it showed that he was serious. And now, the talk continues.

EUR/USD has some support at 1.2960 and more serious support at 1.2880. Resistance is at the round number of 1.30. 

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