In March, inflation in China eased more than expected, indicating a deflationary process underway. The dollar suffered losses in the early European session as investor sentiment maintained a steady optimism ahead of Wednesday’s US CPI data.
The Eurozone Retail Sales data delivered better-than-expected data. Later in the New York session, FOMC member Harker will be speaking and EIA’s short-term energy outlook.
USDZAR sank -0.79% in the European session ahead of the US inflation data on Wednesday. The US consumer price index year-on-year has been forecast to drop to 5.2% from 6.0% which may increase bets of a slower hiking pace by the Fed. Also weighing on the greenback was the improving risk appetite in European trade.
The South African production data for February will be featured during the day and is expected to show an improvement in the sector. The US economic file will include a speech from FOMC member Harker, weekly crude oil stock, and the EIA short-term energy outlook. The pair’s bulls gave up 18.50 as sellers may reclaim 18.20 and 18.00.
The EUR traded flat at -0.07% against the CHF following economic data releases from the Eurozone. Retail Sales month-on-month for February remained unchanged at -0.8% while the year-on-year reading came in better than anticipated at-3.0% vs -3.5%.
However, the Euro may be lifted by stronger-than-expected Sentix Consumer Confidence, which soared to -8.7 from a previous print of -11.1. Buyers may show interest if the 0.9900 resistance is turned into support. In the meantime, a slide below 0.9850 may reinforce selling pressure to 0.9800.
GBPAUD was up +0.26% as it regained its strength in the European session after losing ground to 1.8585, a fresh 3-day low. Earlier in the Asian session, the Australian Westpac Banking Corporation showed that consumer confidence jumped from 0.0% to 9.4% in April. The data boosted the AUD together with the NAB business confidence which rose to -1. against a survey of -2.0. On the other hand, China’s inflation year-on-year eased to 0.7% from 1.0% in March while the producer prices rose -2.5%, a slower pace than the previous year. An extended rise may give traders 1.8780.
European stocks were largely higher on European Banks’ optimism. FTSE100 was steady at -0.02% as bulls retracted from the 7800 near-term high and 7700 remains a critical support. The CAC40 soared by +0.93% and near-term gains remain capped by the 7400 level, a break above that level could reinforce bullish strength towards the 7500 level. DAX held to +0.32% of gains as bulls retracted from the 15775 level and 15500 remains a pivotal support in the near term.
US stock futures gave in earlier gains ahead of the US Inflation point. US500 futures were down -0.09% from the 4120 daily high and the 4070 remains a key support area. US100 futures dropped by -0.25% as bulls lost steam below the 13100 level and a break below the 12900 level could trigger selling pressure towards the 12500 level. US30 futures trimmed gains to -0.09% as 33600 near-term psychological level holds and 33300 is a near-term target.
Elsewhere, gold gained as the dollar retreated ahead of the US inflation data which will give traders clues on rate hikes by the Fed. As of 12:30 London time, XAUUSD was up +0.49% trading near the 2000 mark. Further up, buyers may seek $2 050 and $2 080 in the short term.