Forex - CPI April slow increase helped Stocks and raised investors risk’s appetite

Forex News and Events: The Yen eased broadly on Wednesday as a slow increase in US Consumer Inflation report for April boosted stocks and raised investor appetite for risk. This fade CPI briefly caused traders to sell the Dollar, but analysts said it did not changed market views that the Federal Reserve's cycle of interest rate cuts was almost over. UsdJpy jumped to a session high of 105.44, with Wall Street stocks surging as inflation worries eased. It last traded at 105.17 up 0.39%. EurJpy gained 0.37% to 162.66 while the CadJpy rose 0.34% to 104.68 after posting 105.58 intraday high. EurUsd was flat at 1.5467 after posting intraday 1.5396 low. US CPI rose by 0.2% in April, slightly less than the 0.3% forecast by market analysts. CPI rose 0.3% in March. Speculation the Fed is done with cutting borrowing costs, having slashed its key lending rate by 325bp to 2% since mid-September, has supported the Dollar and analysts said this view had not changed. US interest rate futures showed the Fed would raise the benchmark federal funds rate by a 25bp by year-end to 2.25%. They also priced in a 92% chance that the central bank would leave rates unchanged next month. Sterling drop to a near three-month low against the Dollar after the Bank of England, in its quarterly inflation report, said British prices would shoot up this year, which many believe may delay interest rate cuts. If British inflation continues to heat up, this will have a negative impact on the broader economy while keeping the central bank wary of cutting rates, which often promotes growth. GbpUsd last traded up 0.08% at 1.9964.

Today's Key Issues (time in GMT): 08:00 NOK April Trade Balance previously Nok 39.1B 09:00 EUR Q1 Euro-zone GDP 0.5% vs 0.4% (QoQ) 09:00 EUR Q1 Euro-zone GDP 1.9% vs 2.2% (YoY) 09:00 EUR April Euro-zone CPI ex-food/energy 0.3% vs 0.9% (MoM) 09:00 EUR April Euro-zone CPI ex-food/energy 2.4% vs 2.7% (YoY) 09:00 EUR April Euro-zone CPI Final 0.3% vs 1% (MoM) 09:00 EUR April Euro-zone CPI Final 3.3% vs 3.6% (YoY) 12:30 USD weekly Initial Claims 370k vs 365k 12:30 USD May NY Fed manufacturing 0.00 vs 0.63 12:30 CAD March Manufacturing sales 0.2% vs 1.6% 13:00 USD March Net L-T flows $62.5B vs $72.5B 13:15 USD April Capacity utilization 80.1% vs 80.5% 13:15 USD April Industrial output -0.3%vs 0.3% 14:00 USD May Philadelphia Fed Survey -19 vs -24.9 17:00 USD May NAHB housing market index 20 vs 20 22:45 NZD Q1 NZ Producer Prices 1.1% vs 1.3% 22:45 NZD Q1 Producer Prices index 1.3% vs 1.5% 23:50 JPY Q1 GDP Deflator -1.5% vs -1.3% 23:50 JPY Q1 GDP annualized 2.5% vs 3.5% 23:50 JPY Q1 GDP 0.6% vs 0.9% (QoQ)

The Risk Today: EurUsd Euro returns on consolidation 1.5400 – 1.5600 range after a three weeks downtrend. Initial resistance hold 1.5571 Monday high. Pivot point holds 1.6000 resistance ahead of key resistance 1.6200 market target. On downside, psychological 1.5000 key level marks strong support ahead of 1.4500 pivot point. GbpUsd Cable broke 1.9500 level Tuesday. Further pressure may open the way down to 1.9337 January low and 1.9105 (50% retracement of 1.7049 – 2.1162 advance). A return over 1.9600 and 1.9800 may reopen the way toward 2.0000 psychological level. Actual trading range is 1.9400 – 1.9600. UsdJpy Recent 1 ½-month uptrend found resistance around 105. Further advance would bring market up to 110.10 strong (Trendline) resistance and mid January double top ahead of 111.92 early January high. Profit taking on 105 might send the market back down to 100 – 104 consolidation trading range. Minor support holds 103.39 yesterday low. UsdChf Market hit 1.0625 two-month high last Thursday. It is currently consolidating in 1.0400-1.0600 trading range. Renewed weakness would open the way down to 1.0200 and toward 0.9639 17th March low. Early January double top 1.1191 marks strong resistance.

Resistance and Support: EURUSD GBPUSD USDJPY USDCHF 1.6200 T 2.0447 S 111.92 K 1.1191 K 1.6000 K 2.0100 P 110.10 T 1.0625 T 1.5571 M 1.9800 S 105.70 M 1.0582 M 1.5545 1.9485 104.70 1.0490 1.5285 M 1.9391 M 103.39 M 1.0390 M 1.5000 K 1.9337 S 100.00 P 1.0200 S 1.4500 P 1.9105 K 95.74 K 0.9637 K S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot