Europe Open: Aussie nudges up on GDP data, USD/JPY follows Nikkei Weakness- Wednesday, 04 March 2015

Market Roundup

• BoJ Gov Kuroda - Must maintain confidence in Japan fiscal policy, JGBs, fiscaldiscipline important, to meet 2% CPI target but risks still from crude prices,will adjust policy without hesitation if necessary. 
  
  
• BoJ PB Miyao - 2% CPI target will be achieved, timing uncertain, upward pricepressures rising, ambiguity in forecasts unavoidable for policy flexibility.
  
  
• Japan METI Oe - Adding currency rules would kill TPP.
  
  
• Japanese workers get small share of corp earnings despite record profits.
  
  
• Pay gap widens most in North America, Asia - Hay Group study.
  
  
• US Feb auto sales +5.3% to 16.23 mln AR, Toyota passes Ford as number 2.
  
  
• China PBOC Yi - Studying any deflationary risks - Shanghai Securities News.
  
  
• BOC cuts SLF overnight repo rate to 4.5% from 5% - Caixin.
  
  
• China Feb HSBC services PIMI 52.0, Jan 51.8, new orders best in three months.
  
  
• China Q4 inbound investment $2.4 bln, outbound $3.23 bln
  
  
• RBA to investigate dollar spike ahead of announcement - TheAge.com.au.
  
  
• Australia Q4 GDP +0.5% q/q, +2.5% y/y, as expected, consumption +0.8%, fixed capital expenditure +0.3%, chain price index -0.2%, Q3 GDP rev +0.4% q/q.
  
  
• Australia Feb PSI +1.8 pt to 51.7, first expansion in year.
  
  
• Australia Feb VFACTS new vehicle sales +10.1% m/m, +4.2% y/y, best Feb ever.
  
  
• NZ Q4 residential bldg work +4.3% q/q to NZ$1.4 bln, volume -5.0%.
  
  
• Dairy prices rise, volumes drop at NZ Fonterra auction, GDP price index +1.1%.

Economic Data Ahead (Time in GMT)

• 07:30 Sweden Feb PMI - services,  57.4 expected; last  57.9.
  
  
• 08:15 Spain Feb PMI - services, 56.7 expected; last  56.7.
  
  
• 08:45 Italy Feb PMI - services,  51.4 expected; last  51.2.
  
  
• 08:50 France Feb PMI - services, 53.4 eyed; flash 53.4.
  
  
• 08:50 France Feb PMI - composite; last 52.2.
  
  
• 08:55 Germany Feb PMI - services, 55.5 expected; flash 55.5.
  
  
• 08:55 Germany Feb PMI - composite; last 54.3.
  
  
• 09:00 EZ Feb PMI - services,  53.9 expected; flash 53.9.
  
  
• 09:00 EZ Feb PMI - composite, 53.5 expected; flash 53.5.
  
  
• 09:00 Norway Feb housing prices; last +8.5% y/y.
  
  
• 09:00 Norway Q4  current account balance; last NOK52.3 bln.
  
  
• 09:30 UK Feb PMI - services,  57.5 expected; last  57.2.
  
  
• 10:00 EZ Jan retail sales, +0.1% m/m, +1.9% y/y expected; last +0.3%, +2.8%.
  
  
• 13:15 US Feb ADP national employment, +220k expected; last +213k.
  
  
• 14:45 US Feb Markit composite PMI - final; flash 56.8.
  
  
• 14:45 US Feb Markit services  PMI - final; flash 57.0.
  
  
• 15:00 US Feb ISM non-mfg PMI, 56.5 expectedd; last 56.7.
  
  

Events Ahead (GMT)

• N/A   BoE Bailey/Boss/Randall parliamentary testimony, MPC begins 2-day meeting.
  
  
• N/A   EU court ruling on ECB challenge to UK clearing, Sweden govt bond auction.
  
  
• 14:00 Chicago Fed Evans speech in Lake Forest.
  
  
• 15:00 BoC policy announcement, no change in 0.75% o/n rate generally expected.
  
  
• 18:00 Buba Thiele speech in Berlin.
  
  
• 18:00 KC Fed George speech in Kansas City.
  
  
• 19:00 Fed Beige Book released.
  
  
• 19:30 US Treasury Secretary Lew, others Senate testimony.

FX Beat

USD/JPY fell from 119.76 to 119.49 in line with Nikkei weakness before bouncing. Japanese and option-related bids were noted from at 119.50 (US$626 mln in 119.50-55 expiries). Japanese exporters and others including option players look to cap it above 120.00 (US$664 mln in 120.00 expiries). The intraday bias remains neutral. Overall, the pair is at the sideway consolidation pattern from 121.84. On the downside, below 188.22 will bring another fall. But decline attempt should be contained by 38.2% retracement of 105.19 to 121.84 at 115.47 and rebound. Above 120.46 will target resistance at 121.84. But break of 121.84 is needed to confirm larger up trend resumption. While there is no bounce seen in EUR/JPY, off from 133.88 to 133.61 and steadying. GBP/JPY fell slightly from 183.93 to 183.54. AUD/JPY was hovering between 93.29-67. 

EUR/USD started at 1.1175 in Asia after a sluggish US session. It was hovering between 1.1167-85. 5, 10 & 20 dma's fell and 20 day Bolli's expanded, the initial target is 1.1098 2015 low - NY 1.1154 low first support NY. Good bids are expected ahead of 1.1150 and sellers lined up between 1.1220-40, containing the price action. A break below presumed option barriers at 1.1150 targets 1.1100 where more barriers are tipped and 1.1098, the trend low on January 26.

GBP/USD inched up to 1.5375 before falling back to 1.5346. EUR/GBP treaded water between 0.7274-78.

USD/CHF dipped early with USD/JPY to 0.9601 before bouncing later to 0.9624. EUR/CHF treaded water between 1.0734-45.

AUD/USD nudged up to $0.7824, from a session low of $0.7795, after figures showed gross domestic produce rose a moderate 0.5 percent in the fourth quarter for an annual rate of 2.5 percent. Good offers at 0.7850 helped contain the topside. The consensus saw today's data solid but not enough to change expectations of eventual RBA ease.

NZD/USD closed in New York at 0.7546. It added to gains seen overnight, trading up from 0.7546 to 0.7570 before falling back to where it started. AUD/NZD bounced from an early low of 1.0324 to 1.0358 before steadying.