Week ending 3 April 2009: With global financial markets shaking off risk aversion, currencies resumed answering fundamental and technical pressures to some extent and repat flows into USD and JPY reversed. Dismal data was shrugged off as “lagging indicators” and any surprise to the upside was touted in the search for a bottom.

The RBS meets Tuesday, 7 April, and although its next move is unclear, a cut of 25bps is possible. The February trade balance surged to AU$2109M from $926M previous as retail sales fell −2.0% m/m, consumer imports weakened, and exports gained. March PMIs improved to 33.4 manufacturing, 35.6 services. AUD/USD completed the previous week’s double top, falling to support at 0.6766 before turning, punching through resistance at 0.7000 and closing at 0.7154 on profit-taking.

U.S. payrolls cut 663K jobs and March unemployment reached 8.5%. March consumer confidence improved marginally to 26.0, manufacturing PMI to 36.3, and services to 40.8, while February factory orders rose 1.8% m/m.

The ECB lowered rates 25bps, less than market expectations, and spoke of QE measures as a topic for the April meeting, when rates will likely be cut again. March PMIs printed 44.1 retail, 33.9 manufacturing, 40.9 services, and 38.3 composite. February unemployment rose to 8.5% and March CPI has fallen to 0.6%. March confidence indicators all fell: −3.58 business climate, −34 consumer, 64.6 economic, −38 industrial, and −25 services. EUR/USD continues to seek a new balance, bouncing from support at 1.3130 before climbing to close at 1.3487.

The BoE meets Thursday, 9 April and is unlikely to lower rates beyond the current 0.50%. U.K. data pleasantly surprised to the upside, with March PMIs printing 39.1 manufacturing, 30.9 construction, and 45.5 services. Although the HBOS housing price index is down −17.5% 3m/y, it’s an improvement from 17.7% previous, and the Nationwide index improved to −15.7% y/y from −17.6%. GBP/USD strengthened on the data and closed at 1.4823, very near the weekly high, while EUR/GBP was all one way, spiking briefly through support at 0.9073 and closing at 0.9092.

Canada’s January GDP reading contracted −0.7% m/m but February raw material price index rose 1.7% m/m. USD/CAD bounced from resistance at 1.2725 and fell to close at 1.2301, while AUD/CAD surged from support at 0.8480 to resistance at 0.8920, closing at 0.8801.

New Zealand’s March NBNZ business confidence improved to −39.3. NZD/USD this week and last repeatedly tested support at 0.5575, best seen on four-hour charts, using it midweek to push higher and close at resistance at 0.5866, and AUD/NZD consolidated between 1.2075 and 1.2425.

Japan’s 1Q2009 Tankan index collapsed to historic lows, printing −58 large manufacturers, −51 outlook, and −31 non-manufacturers, −30 outlook, with capex to decline −6.6%. February household spending fell −3.5% y/y and unemployment rose to 4.4%. February industrial production printed −9.4% m/m, −38.4% y/y, with vehicle production down −56.2% y/y and March vehicle sales down −32.0% y/y. USD/JPY finally pushed past resistance at 98.65 to convincingly test 100.00, closing above. EUR/JPY rose to 135.22 and AUD/JPY to 71.73, testing the bottom side of a trend line drawn from 18 March’s low of 63.97, best seen on four-hour charts and shown below. Note the previous week’s clear double top, completed before the initiation of the uptrend.