USD gains after a narrow US trade deficit

US futures pointed to a higher open after another session of earnings. Yesterday, Netflix reported a quarterly profit of $0.79 per share, which was higher than the expected $0.57. IBM beat the consensus estimate by 3 cents but the stock remained under pressure because of the weak results from the cloud segment. Today, Morgan Stanley reported a quarterly profit of $1.33, which was higher than the expected $1.17. Like Goldman Sachs, the bank reported weaker Fixed Income Commodities and Currencies (FICC) income. In general, investors have loved this earning season because most companies have beat expectations.

The US dollar strengthened slightly after the country released trade data for March. In the month, the country’s exports increased to $209 billion from February’s $207 billion. Imports increased slightly from $258 billion to $259 billion. As a result, the country’s trade deficit narrowed to $49.4 billion, which was lower than the expected $53 billion. Meanwhile, in Canada, the trade deficit declined to $2.9 billion. In the month, exports declined slightly to $47.9 billion while imports declined to $50.8 billion. In Japan, trade data showed that the trade surplus increased to 529 billion yen.

The Aussie rose sharply after the impressive economic data from China. In the first quarter, the country’s economy expanded by 6.4%, topping the consensus estimate of 6.3%. In March, the industrial production rose by 8.5%, which was higher than the expected 5.6% while retail sales increased by 8.7%. The unemployment rate decreased from 5.3% to 5.2%. The Australian dollar is often viewed as a proxy for the Chinese market because of the vast amount of trade it conducts in the country.

In the United Kingdom, the headline CPI declined to 1.9% from the previous 2.0%. On a MoM basis, the headline CPI rose by 0.2%, which was weaker than the expected 0.3%. The core CPI, increased by an annual rate of 1.8%, which was lower than the expected 1.9%.  The headline Retail Price Index (RPI) increased by an annual rate of 2.4%, lower than the expected growth of 2.6%. In the EU, the headline inflation was unchanged at 1.4%. In Canada, the headline CPI increased from 1.5% to 1.9%.

EUR/USD

The EUR/USD pair declined sharply after the better-than-expected trade numbers from the US. The pair declined from a high of 1.1323 to a low of 1.1290. On the hourly chart, the price is slightly below the 25-day and 50-day moving averages. The RSI has dropped to the current level of 44 while the accumulation and distribution indicator too is declining. The pair could continue to decline to test the important support level of 1.1270.

AUD/USD

The AUD/USD rose sharply after the release of the Chinese data. The pair reached a high of 0.7205, which was the highest level since February 27. On the four-hour chart, the price is along the upper line of the Bollinger Bands. It is also above the 50-day and 25-day moving averages. At the same time, the moving average oscillator has remained above the neutral line. There is a likelihood that the pair will continue moving upwards to test the important resistance level of 0.7220.

GBP/USD

The GBP/USD pair was relatively unmoved in today’s trading. Yesterday, the pair crossed the lower line of the symmetrical triangle. Today, it declined slightly to almost the 38.2% Fibonacci Retracement level.  However, as shown below, this breakout is happening at a period of lower volumes. This means that the pair will likely continue to remain along these levels. Alternatively, it will return to the 50% Fibonacci Retracement level of 1.3080.