Europe Open: BOJ Kuroda says current QQE will end if 2 pct inflation is achieved in a stable manner- 26 February, 2015

Market Roundup

• BoJ Gov Kuroda: Don't think buying long-term JGBs under QQE makes it impossible to exit QQE; BoJ will be able to cope with exit from QQE through various options; will end current QQE if 2 pct inflation is achieved in stable manner; have no ceiling in mind on how much BoJ will expand its balance sheet relative to GDP.
  
  
• BoJ Policy Board Ishida: Optimistic on Japan/global growth, BoJ shouldn't adjust policy to enable on-target CPI growth; adjustments only when price stability-growth at risk, exports-growth positive amid weak JPY environment.
  
  
• MoF flow data week-ended Feb 21: Japanese buy net Y297.4 bln foreign stocks, Y166.3 bln bonds, sell Y47.6 bln bills; foreign investors buy net Y289.0 bln Japanese stocks, Y46.8 bln bonds, sell trln bills.
  
  
• Australia Q4 new CAPEX -2.2% q/q, -1.9% expected, 1st estimate 2015/16 A$109.8 bln.
  
  
• New Zealand Jan trade surplus NZD56 mln, annual deficit bln, NZD183 mln and bln expected, imports bln, lower than tiger, exports bln.
  
  
• New Zealand's Fonterra -We are advising farmers to continue to be cautious with budgeting; New Zealand volumes are down, with continued uncertainty in milk production due to climatic conditions.

Economic Data Ahead

• (0200 ET/0700 GMT) Germany Mar GfK consumer sentiment index, 9.5 consensus; previous 9.3.
  
  
• (0300 ET/0800 GMT) Spain Q4 GDP, +0.7% q/q, +2.0% y/y consensus; flash +0.7%, +2.0%.
  
  
• (0330 ET/0830 GMT) Sweden Jan household lending; previous +6.1% y/y.
  
  
• (0330 ET/0830 GMT) Sweden Jan trade balance; previous SEK400 mln surplus.
  
  
• (0355 ET/0855 GMT) Germany Feb unemployment, 6.5% sa, -10k consensus; previous 6.5%, -8k.
  
  
• (0355 ET/0855 GMT) Germany Feb unemployment, 3.0 mln nsa consensus; previous 3.0 mln nsa, 2.84 mln sa.
  
  
• (0400 ET/0900 GMT) Italy Dec retail sales; previous +0.1% m/m sa, -2.3% y/y nsa.
  
  
• (0400 ET/0900 GMT) Eurozone Jan money supply M3, +3.7 AR consensus; previous +3.6%, 3-mo MA +3.1%.
  
  
• (0400 ET/0900 GMT) Eurozone Jan private loans, -0.3% consensus; previous -0.5%.
  
  
• (0430 ET/0930 GMT) UK Q4 GDP - 2nd release, +0.5% q/q, +2.7% y/y consensus; previous +0.5%, +2.7%.
  
  
• (0500 ET/1000 GMT) Eurozone Feb economic sentiment index, 101.9 consensus; previous 101.2.
  
  
• (0500 ET/1000 GMT) Eurozone Feb business climate index, 0.22 consensus; previous 0.16.
  
  
• (0500 ET/1000 GMT) Eurozone Feb industrial sentiment index, -4.5 consensus; previous -5.0.
  
  
• (0500 ET/1000 GMT) Eurozone Feb consumer sentiment index, -6.7 consensus; previous -8.5.
  
  
• (0500 ET/1000 GMT) Eurozone Feb services sentiment index, 5.3 consensus; previous 4.8.
  
  
• (0500 ET/1000 GMT) Italy Feb business confidence index, 98.0 consensus; previous 97.1.
  
  
• (0500 ET/1000 GMT) Italy Feb consumer confidence index, 104.5 consensus; previous 104.0.
  
  
• (0600 ET/1100 GMT) Italy Jan wage inflation; previous unch m/m, +1.1% y/y.
  
  
• (0830 ET/1330 GMT) US Jan CPI, -0.6% m/m, -0.1% y/y consensus; previous -0.3%, +0.8%.
  
  
• (0830 ET/1330 GMT) US Jan core CPI, +0.1% m/m, +1.6% y/y consensus; previous +0.1%, +1.6%.
  
  
• (0830 ET/1330 GMT) US Jan durable goods orders, +1.7% m/m consensus; previous -3.3%, ex-defense -3.0%.
  
  
• (0830 ET/1330 GMT) US Jan - ex-trans/non def ex-air, +0.5%, +0.3% m/m consensus; previous -0.8%, -0.1%.
  
  
• (0830 ET/1330 GMT) US w/e initial jobless claims, 290k consensus; previous 283k.
  
  
• (0830 ET/1330 GMT) US Jan real weekly earnings, +0.3% m/m consensus; previous +0.2%.
  
  
• (0900 ET/1400 GMT) US Dec monthly home prices; previous +0.8% m/m, +5.3% y/y.
  
  
• (1100 ET/1600 GMT) US Feb KC Fed composite/mfg indices; previous +3, -2.
  
  
• (1130 ET/1630 GMT) US Jan Cleveland Fed CPI; previous +0.2%.

Key Events Ahead

• (0500 ET/1000 GMT) Buba Nagel speech in Hamburg.
  
  
• (0500 ET/1000 GMT) Italy E2-2.5, 3.5-4.5 bln 1.05% and 1.5% 2019 and 2025 BTP auctions.
  
  
• (0500 ET/1000 GMT) Italy -1.75 bln 0.495% 2020 CCTeu auction.
  
  
• (0545 ET/1045 GMT) Buba Dombret speech in Berlin.
  
  
• (1230 ET/1730 GMT) BoE Deputy Governor Safik speech at University of Warwick.
  
  
• (1300 ET/1800 GMT) Atlanta Fed Lockhart speech at Atlanta banking conference.
  
  
• (1315 ET/1815 GMT) Dallas Fed Fisher lecture at Imperial College of London.
  
  
• (1330 ET/1830 GMT) ECB Linde speech in Madrid.

FX Recap

EUR/USD climbed up to 1.1364, from this week's trough of 1.1288, but continued choppy trade in tight 1.12-1.15 range. A break above 1.1400 could push the pair further to 1.1450 and then at 1.1499. On the downside, it is likely to find support at 1.1270, below which losses could be extended to 1.1224 and further to 1.1200.

USD/JPY is trading at 118.94 currently, with a high of 119.08 and low of 118.80. It has been hovering around the 119 handle this week and has failed so far to break above. On the downside, support is located at 118 levels and a break below could extend the losses to 116.20 levels and then to 115.50 levels.

AUD/USD dropped 0.5 percent to 0.7848 in Asian trading, weighed by disappointing Australian business investment data which supported the case for more rate cuts by the RBA. It currently trades around 0.7856 levels and only a convincing break above this level would confirm the upward trend. Pair is likely to find strong support at 0.7676 levels.

NZD/USD was steady at 0.7555 after hitting a one-month high of 0.7577. Support is located at 0.7530 and 0.7500 levels.  On the topside, only a break above the 0.7600 handle would suggest the pair's rally.

USD/CNY China's yuan was seen under pressure on Thursday on rising expectations of deflationary pressures and a slowing economy and subsequent rate cuts by the PBOC in the coming months. On Thursday, spot yuan opened at 6.2598 per dollar and was trading at 6.2595 at midday. Prior to market open, the central bank set the midpoint rate at 6.1379 per dollar, stronger than the previous fix of 6.1384.