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Old 01-04-2014, 13:30
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Default Re: Market news and trade recommendations by FBS

April 1: Asian session

Asian shares swung between gains and losses as investors weighed reports on China’s manufacturing that pointed to weakness in the world’s second-biggest economy. China March manufacturing PMI came a bit above the forecast at 50.3 (forecast: 50.1, previous: 50.2). However, the final manufacturing PMI from HSBC disappointed, falling the last week's estimate of 48.1 to 48.0 (February: 48.5).

USD/JPY is trading a bit on the upside in the 103.20/35 area, below yesterday’s high at 103.43. Yen remained lower after Bank of Japan’s data showed the Tankan index for sentiment among large manufacturers in the nation rose to 17 in Q1 from 16 in the previous period, while analysts surveyed by Bloomberg News expected an advance to 19. According to Mizuho, “Tankan was weak”.

AUD/USD retested the $0.9300 mark early in the session, but later slipped back into the $0.9260 area. RBA meeting was a pretty neutral event. The regulator repeated the Aussie dollar is high by historical standards, but said it sees a period of interest rate stability ahead. NZD/USD stayed in a small range around the $0.8670 mark.

EUR/USD edged up to $1.3778 after forming a spinning top candle yesterday. GBP/USD edged up to $1.6670, but is below yesterday’s high at $1.6684. US held losses versus most major peers as investors wondered weigh whether American economic data this week will be strong enough to lift central bank’s concerns that the economy still needs stimulus.

Key option levels (Apr. 1)

Market prices tend to move towards the strike price at the time large vanilla options (ordinary put and call options) expire. It happens (all things equal) as each side of the deal seeks to hedge its risk exposure. This action is most noticeable ahead of 10 a.m. New York time when the majority of options expire (14:00 GMT).

Here are the key options expiring today:

EUR/USD: $1.3650, $1.3700, $1.3750, $1.3765, $1.3790, $1.3800, $1.3830, $1.3890;

GBP/USD: $1.6500, $1.6630;

USD/JPY: 102.10 (large), 102.30 (large), 102.50 (large), 103.25, 103.30, 103.75 (large);

AUD/USD: none;

USD/CAD: 1.0900 (large), 1.1030, 1.1200;

EUR/JPY: 143.00;

AUD/JPY: 94.00.

Trade on US data releases

The Fed’s Chairwoman Janet Yellen said yesterday US economy will need stimulus “for some time.” Analysts at BNP Paribas think, however, that Yellen’s dovish comments was an attempt to reverse some of the impression created by her “6 months” reference (time between the end of QE and the start of rate hikes) at the March FOMC press conference. The specialists note, however, that the market’s reaction was muted. In their view, this seems unlikely to reverse and prospects for USD will remain good unless data begins to materially deteriorate again.

Economists surveyed by Bloomberg predict a report today will show quicker manufacturing growth, while a private survey tomorrow may indicate an improving jobs market. Figures tomorrow from the ADP Research Institute may show companies in the US added 195K jobs in March after boosting positions by 139K the previous month.

Citigroup Inc.’s Economic Surprise Index for the US, which shows whether data beat or fell short of economists’ forecasts, dropped to a one-week low of minus 32.60 yesterday.

BNPP is long on USD/JPY ahead of the release of the ISM Manufacturing PMI (14:00 GMT).

Trade signals from Danske Bank (Apr. 1)

EUR/USD: Sell at $1.3780 with a target of $1.3705 and a stop at $1.3815

USD/JPY: Long at 102.12 with a target of 103.77 and a stop at 103.01

GBP/USD: Buy at $1.6645 with a target of $1.6745 and a stop at $1.6595

USD/CHF: Long at 0.8840 with a target of 0.8899 and a stop at 0.8809

AUD/USD: Look to buy

USD/CAD: Long at 1.1025 with a target of 1.1170 and a stop at 1.0995
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