ASIA session review: pound waits for UK data

Data released (actual, consensus, previous):                

01:30 GMT Australia Home Loans (Apr)  0.8%    2.0%    4.8%       

03:00 GMT Japan BoJ Interest Rate Decision  0.1%    0.1%    0.1%        

05:45 GMT Switzerland SECO Economic Forecasts                      

06:00 GMT Japan Machine Tool Orders (YoY) (May) Preliminar  -7.4%   _     -23.6%    

The euro traded little changed before today’s hearing on OMT program in Germany.

European Central Bank President Mario Draghi said he trusts Germany’s constitutional court, which will consider a case against the central bank’s bond-buying plan starting today.

The ECB’s Outright Monetary Transactions program, introduced last year, will be reviewed by the court in Karlsruhe at hearings this week after plaintiffs including a lawmaker allied to Chancellor Angela Merkel brought a case against it. The as-yet-unused OMT foresees potentially unlimited purchases of bonds of debt-stricken countries that sign up to adjustment programs.

The case will see ECB Executive Board member Joerg Asmussen give contrary testimony to Bundesbank President Jens Weidmann, who has strongly opposed the plan and voted against its introduction last year. Weidmann has said OMT comes too close to the financing of governments by the central bank.

EURO:

there were no key economic reports to weight on euro.

EUR/USD has tested $1.3290 in Asia and retreated, but generally holds higher. Resistance comes at $1.3300, tested Thursday.  A breakout of $1.3319 (high Feb.25) would open the door to $1.3343 (61.8% of Feb-Apr slide). Initial support is around $1.3250/45, with a break under $1.3190 may widen losses  to $1.3108 (MA100d) ahead of $1.3075 (low Jun 6) and then $1.3053 (low Jun.5).

POUND:

The pound was little changed against the dollar before a government report that economists said will show U.K. manufacturing production contracted in April for the first time in three months.

Sterling was also little changed versus the euro.

British manufacturing shrank 0.2% in April from the previous month when it expanded 1.1%, the Office for National Statistics will say today, according to analysts. A separate report will show industrial production stalled after increasing 0.7% in March.

Data released Monday night showed a house-price index from Royal Institution of Chartered Surveyors increased to 5 in May from 1 in April.

The U.K. is scheduled to sell 3.75 billion pounds ($5.8 billion) of new 10-year benchmark securities today.

GBP/USD consolidates within the 50-points range with initial resistance comes at Asia highs on $1.5600/05, stronger - at Thursday’s high on $1.5680, extending to $1.5700. Break under overnight lows on $1.5550 targets support at $1.5500 and then - $1.5420 (38.2% Fibo of the $1.5000 - $1.5680 rise) and $1.5370 (Jun 3 high).

FRANC:

Switzerland released its economic forecasts Tuesday and said that it sees growth at 1.4% in 2013 (from 1.3%):

-inflation at -0.1% (from +0.1%);

-sees  2014 growth at 2.1% and Inflation at 0.2% (both unchanged).

USD/CHF still consolidates within the Chf0.9300 - Chf0.9350 range (initial support and resistance respectively). Further resistance comes at Thursday’s highs on Chf0.9430 and finally Chf0.9500 (psychological level). Below Chf0.9300 initial support is near Thursday’s lows on Chf0.9220/25. Below  support comes at Chf0.9200 (Apr 17 lows).

YEN:

The dollar continued its march against a number of Asian currencies, after Standard & Poor’s upgraded its ratings outlook on the U.S. to stable from negative on Monday, citing the country’s strong economic performance.

The yen pushed back against the dollar after the Bank of Japan’s policy meeting disappointed the market, leaving policy unchanged.

USD/JPY fell below Y98.00 in Asia after the Bank of Japan announced its rate decision. Currently the rate back to above Y98.00, but holds tight. Initial resistance comes at Y99.00 (channel line from May 29), extending to Y99.30 (yesterday’s high, also 50% Fibo of the Y103.80 - Y95.00 decline). Break above targets Y100.40 (61.8% and Jun 4 highs). Initial support is near Y97.70 (Asian lows and 38.2% Fibo of the last 3 days rally). Below dollar may retreat to Y97.20 (50%).

DATA AHEAD:

European data will start at 08:30 GMT with UK’s Industrial Production.

At 14:00 GMT UK’s   NIESR GDP Estimate  is expected.

Japan Machinery Orders will end day’s news at 23:50 GMT.

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