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Kiwi leads gainers: inaction incites bullish forex market

The Asian forex markets opened the week drawing in the first breath of optimism as most major political and economic scares came to an end over the weekend. By the end of day Friday, almost all major economies had announced their March PMI results. Brexit had secured a new lease of life and Sino-U.S trade talks shone a light of optimism. But it was New Zealand’s (NZ) Kiwi that benefited the most as it opened the markets with a +0.20%, dancing around the 0.6780 levels. This would be interpreted by the market to mean a shift in investor’s attention from the safe haven assets and a growing appetite for more risky equities.

Growing optimism

Strong Chinese exports data announced on Friday, which affirms strong manufacturing sector performance reports made public earlier in the month, as well as an equally strong earnings reports by the American banks set the optimism ball rolling. Revived optimism about trade U.S-China trade talks iced the cake at the global front but mixed yields by treasury bills had the net effect of pulling the greenback down.

Fueled by the Brexit deadline extension, GBP bounced up to start the week around 1.31.

The euro took advantage of a weakened greenback to upbeat to start the week a few points above1.1300.

Aussie’s position remained largely unchanged at 0.7180 with experts associating the unexpected performance against the weakened USD on sloppy gold and oil prices.

Oil took a nosedive over the weekend after Russian Finance Minister’s remarks about ditching the OPEC deal and increasing production. Gold, on the other hand, opened the markets around the 1290 range, the lowest point since 5th April after rising optimism about the global economy saw more investors go after riskier assets.

Japanese Yen, considered the safe haven currency, would suffer the same fate as gold when the USD/JPY pair failed to break above 112.10 levels, even in the face of a weakened greenback.

Lean global economic calendar

The global political and economic temperatures have now cooled with no economically disruptive events slated in the immediate future. Headliners for the week include the Swiss March PPI release in Europe and Bank of Canada’s (BOC) Business outlook survey release in North America. These, however, have only marginal effect on the global forex markets and even less impact on the bullish trend the market assumed.

While the EURUSD bids remained relatively scanty, they still tore above the 50-day Moving Averages (MA) trendline and are now headed for the 100-day MA that currently sits at 1.1345. And with no economic disruptors to disrupt the current bullishness, all eyes are on the pair’s performance later in the day during the European session.

Elsewhere, the pound is estimated to push the greenback towards the 4-week old resistance line of 1.3130 on the GBP/USD trade as it takes advantage of its mixed economic reports.

Further east, Indonesia will be pulling off their biggest general election yet on Wednesday, April 17th, when it brings together its 190 million registered voters to elect the President, his deputy, and Members of the Consultative Assembly (MPR). This will be the first time in the country’s history all leaders are elected on the same day and the forex markets can’t wait to see its impact on the USD/IDR trade.

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