Markets Roundup
- USD/JPY heavy after BoJ-114.17 to 112.93
- GBP/USD 1.4303 to 1.4155 on latest Brexit poll
- EUR/USD heavy but a tight 1.1072-1.1121 range
- EZ Q4 Employment y/y vs 1.1% prev
- Campaign for Brexit in lead in ORB/Telegraph-49% vs 47% in and 4% DK
- Sweden Feb CPIF 1.1% y/y vs 1.6% prev and 1.1% exp
- BoJ leaves policy as is, Y80 trln base money target, IOER -0.1%
- BoJ to review ratio of reserves applied to NIRP every 3-mos
- BoJ to exempt money reserve funds from NIRP
- BoJ removes language to cut rates again if needed
- BoJ to maintain option of easing in three dimensions
- RBA Mar 1 minutes – Low infl. provides scope for easing if needed
- China said to draft rules for Tobin tax on currency transactions
Economic Data Ahead
- N/A The Canadian Real Estate Association will report sales of existing homes in February. Sales had rebounded in January from December as strong demand in Toronto and Vancouver offset declines in Calgary and Edmonton.
- (0830 ET/1230 GMT) The U.S. Commerce Department is expected to report that retail sales declined 0.2 percent, reversing January's 0.2 percent gain, according to a Reuters survey of economists. However, core retail sales are expected to have increased 0.2 percent after rising 0.6 percent in January.
- (0830 ET/1230 GMT) The U.S. Labor Department is expected to report that producer prices declined 0.2 percent in February after rising 0.1 percent in the prior month.
- (1000 ET/1400 GMT) The U.S. Commerce Department will release business inventories data for January.
- (1730 ET/2130 GMT) API reports its weekly crude oil stocks.
- (1745 ET/2145 GMT) The Statistics New Zealand will release fourth quarter current account figures.
Key Event Ahead
- (1300 ET/1700 GMT) FOMC begins two-day meeting
- (1430 ET/1830 GMT) New York FedTrade 30-yr Ginnie Mae(max $1.200bln
FX Beat
USD: The dollar index trades around 96.78, having recovered after making a low of 95.93. The short term trend is slightly bullish as long as support 95.60 holds. On the lower side any break below 95.60 confirms minor trend reversal, a decline till 95/94.80/94.34 is possible. Any break above major resistance 97.05 will take the index till 7.60/98.05/98.60.
EUR/USD: The euro edged lower against its U.S counterpart, however, it has recovered after making a low of 1.1071 and currently trades around 1.1105. Any break above 1.11276 confirms minor bullishness, a jump till 1.11935/1.12180 is possible. The pair’s major support is around 1.1050 (200 day MA) and break below targets 1.1000/1.0920.The minor support is around 1.10700. Overall bullish invalidation is only below 1.10820. The pair major resistance is around 1.12180 (161.8% retracement of 1.10682 and 1.0825) and any break above targets 1.12800.
USD/JPY: The yen rose more than half a percent against the dollar on Tuesday, facilitated by a weakening of oil prices which sent investors towards safe havens. The BOJ left policy on hold, in line with market consensus. The central bank governor in the presser stated that it would take time to look at the negative interest rate impact, but it could act again before the cut had worked its way fully into the economy. Investors' attention now shifts on the Fede rate-setters, who are likely to signal a slower pace of interest rate hikes than forecast. The pair has broken major support 113.40 and declined till 112.92 from that level . The short term trend is slightly weak as long as resistance115 holds. On the lower side major support is around 112.60 and break below targets 112.20/111. The major resistance is around 115 and break above targets 116/117.50, while minor resistance is around 113.60/114.20
GBP/USD: Sterling retreated further from a 1-month high against the dollar on Tuesday, after ORB opinion poll suggested slightly more Britons want to leave the EU than stay, fuelling fresh uncertainty about a possible "Brexit". The pound had rallied from a 7-year low of 1.3836 hit in late February to a 1-month high of 1.4437 on Friday as some of the concerns about Britain leaving the European Union receded. Sterling was down 0.8 percent at 1.4187, losing ground for the second straight day. Cable breaks major trend line support 1.4260 and declined till 1.4155 at the time of writing. The short term trend is still weak as long as resistance 1.4280 holds. Any break above 1.4280 will take the pair till 1.4345/1.4380/1.4400 in short term. On the lower side major support is around 1.4150 and any break below targets 1.4100/1.4045. Overall bearish invalidation can happen only if it closes above 1.4400.
USD/CHF: The Swiss franc has recovered after making a low of 0.98028. It is currently trading around 0.98840. The short term trend is slightly bullish as long as support 0.9780 holds. On the higher side any break above 0.9900 will take the pair till 0.9950/1.000/1.00380. Major support is around 0.9780 and break below targets 0.9720/0.9660, while the minor support is around 0.9850.
AUD/USD: The Australian dollar declined as softer commodity prices and a looming policy meeting by the Fed encouraged caution and underpinned the U.S. dollar. The Aussie edged lower to 0.7454, from sessions high of 0.7527 and away from an 8-month of 0.7593 touched on Monday. It has gained more than 3 cents so far this month. In minutes of its March policy meeting, the RBA reiterated there would be scope to ease if needed, though it saw reasonable prospects for continued economic growth. Major resistance is at 0.7600. Aussie has broken major support 0.7500 and declined till 0.7450 at the time of writing. It is currently trading around 0.7460. The short term trend is slightly weak as long as resistance 0.7600 holds. On the higher side major resistance is around 0.7600 and break above targets 0.7640/0.7750. The pair’s major support is around 0.7430 and break below will drag the pair till 0.7400/0.7380.
NZD/USD: The New Zealand dollar was trading lower at 0.6643 after falling sharply overnight in line with other commodity-linked currencies. Earlier in the day, the kiwi touched session's high of 0.6684 before falling down to its current levels. Traders are likely to remain bearish, following its previous session trend. Markets now await Global Dairy Trade auction results which take place overnight. Immediate support is located at 0.6707 (March 3 Low), while resistance is seen at 0.6684 (Session High).
Equties Recap
European shares declined in Asia after the BoJ portrayed a weak picture of the Japanese economy, pushing the yen higher and as oil prices dropped again.
The pan-European FTSEurofirst 300 stocks index declined 0.9 percent, led lower by commodity-related stocks. The STOXX Europe 600 Basic Resources index was down 4.3 percent. Britain's FTSE 100 skidded 0.6 pct, while Germany's Dax and France's CAC 40 plunged 0.5 pct and 0.7 pct, respectively.
Tokyo's Nikkei closed down 0.68 pct at 17,117.07 as a stronger yen hurt exporters. MSCI's broadest index of Asia-Pacific shares outside Japan extended early losses and were down 1.2 percent.
Shanghai Composite Index edged up 0.2 pct at 2,864.37 points, with Csi300 Index gaining 0.3 pct at 3,074.78 points. HK’s Hang Seng Index declined down 0.7 pct at 20,288.77 points.
Commodities Recap
Oil prices declined for a second day on Tuesday, raising the possibility that a 6-week recovery in oil prices that has helped buoy stocks markets may be fading. Brent crude futures were down $1.17 at $38.53 a barrel by 1120 GMT, while U.S. crude futures were 82 cents lower at $36.36.
Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks. Spot gold dropped 0.7 percent to 1,234.05 an ounce by 1117 GMT, while U.S. gold slid 1.3 percent to $1,229.10 an ounce. Spot gold earlier in the session fell to $1,225.70 an ounce, its lowest since March 2.
Treasuries Recap
The 10 years U.S. Treasury yields declined 3.2 basis points to 1.93 percent as investors squared up positions before the Fed meeting.
Euro zone government bond yields, which dropped in the previous 2 days after the ECB cut interest rates and expanded its asset-purchase scheme last Thursday, held steady. Bunds were down to 161.26 last, there has been a minor rebound however the outlook remains bearish.
Japanese government bond prices slipped on Tuesday after the BoJ refrained from further monetary easing, preferring to spend more time gauging the impact on the economy of its decision in January to adopt negative interest rates. The benchmark 10-year JGB yield was up 2.5 basis points at minus 0.025 percent. The 30-year yield was at 0.710 percent, after sinking to a historical trough of 0.460 percent a week ago.
Gilts opened 2 ticks higher than the settlement of 119.82 after core markets drew support from a gloomy outlook from the Bank of Japan overnight. Buyers extended gains in early trading after 10-year cash support from yesterday's lows at 1.539% gave way.
Australian government bond futures were off multi-week lows, with the 3-year bond contract up 4 ticks at 97.935. The 10-year contract rose 3.25 ticks to 97.3375, while the 20-year contract held steady at 96.7875. New Zealand government bonds were mixed across the curve, with yields a shade firmer at the long end.
