Market Roundup
- EUR/USD plays 1.1235-1.1285, USD/JPY 111.22-111.66
- Cable soft as politics weighs: Plays 1.4375-1.4468
- EZ Jan C/A s/adj E25.4bln vs EUR28.5bln revised previous
- EZ Jan Net Inc Flow E45.6bln vs EUR89.3bln revised previous
- Brexit could cost Britian GBP100 bil & a million jobs - CBI
- RBNZ to investigate alleged leak of Mar 10 OCR decision
- China Feb gasoline exports up 169.5% y/y, diesel up 587%
Economic Data Ahead
- (0830 ET/1230 GMT) Federal Reserve Bank of Chicago will release its Fed National Activity Index (CFNAI) for the month of Feb. The index stood at 0.28 in January.
- (1000 ET/1400 GMT) U.S. home resales as measured by the National Association of Realtors are likely to have declined 2.2 percent in February from January to an annual rate of 5.34 million units.
- (1030 ET/1430 GMT) Australia's Conference Board releases its Lending Index for the month of January.
- (1100 ET/1500 GMT) European Commission releases its Preliminary Consumer Confidence Index for the month of March. The index is likely to show a slight improved reading of -8.15, after posting -8.80 in the prior months.
Key Events Ahead
- (1240 ET/1640 GMT) Federal Reserve Bank of Atlanta President Dennis Lockhart speaks on the economic outlook and monetary policy before the Rotary Club of Savannah. The statement will set the tone for rate hikes to come, and give some sense of when rates will next rise.
FX Beat
USD: The dollar declined 0.4 percent to 111.50 yen but was 0.2 percent stronger against the euro at 1.1251. Against a basket of currencies, the dollar index edged up over 0.1 percent at 95.237, after falling for 3 successive weeks. The short term trend is slightly weak as long as resistance 95.65 holds. On the lower side any break below 94.50 will drag the pair till 94/93.16.
EUR/USD: The euro trades around 0.2 percent to 1.1275 lower, having touched sessions low of 1.1235. Intraday trend is slightly weak as long as resistance 1.1350 (trend line joining 1.1495 and 1.1376) holds. Any break above 1.1350 will take the pair to next level till 1.1380/1.14375. The minor resistance is around 1.1320. On the lower side major support is around 1.12750 and break below targets 1.1200/1.1155. The short term trend is reversal only above 1.1380. The euro was 0.4 percent higher at 78.15 pence .
USD/JPY: The yen gained 0.4 percent to 111.50 per dollar. It has recovered after making a low of 110.66 and trades around 111.46. The short term trend is slightly weak as long as resistance 112.70 holds. On the lower side major support is around 110 and break below targets 108.85/106. The major resistance is around 112.70 and break above targets 113.60/114.25. The minor resistance is around 112.
GBP/USD: Sterling declined 0.6 percent to 1.4390, pummeled after the resignation of "Brexit" supporter and Work and Pensions Secretary Iain Duncan Smith heightened worries over divisions in PM Cameron's government before the June 23 referendum. However, it is managing to stay above last week's low of $1.4053 hit on Wednesday, when the government's 2016 budget trimmed growth and inflation forecasts. The pound fell 0.6 percent to $1.4392 in early trade and also lost around 0.5 percent to 78.20 pence per euro. Earlier in the session the pair made a high of 1.4514 and started to decline from that level. It trades around 1.44150. Any break below 1.4400 will drag the pair down till 1.4360/1.4280 level. On the higher side minor resistance is around 1.4461 and break above targets 1.4520/1.4580 level.
USD/CHF: The pair has formed a double bottom around 0.9650 and slightly recovered from that level. It is trades 0.03 percent down at 0.9689 against its U.S counterpart. The short term trend is slightly bullish as long as support 0.9650 holds. The major support is around 0.9650 and any break below will drag the pair down till 0.9600/0.9528 level. On the higher side minor resistance is around 0.9750 and any break above targets 0.9780/0.9855. The short term bearish invalidation is only above 0.9780.
AUD/USD: The Australian dollar pulled away from multi-month highs after hefty gains left the currency overstretched. The Aussie declined to 0.7568, having dropped a cent from Friday. However, it quickly rose up and trades around 0.7618, slightly lower to 0.7626 (Sessions High). The pair's strength is due more to shake-out in bullish U.S. dollar bets following dovish signals from the Federal Reserve than domestic news. The Aussie has advanced 6 percent this month and if sustained, it would be the largest monthly rise since 2011. Investors now await RBA Governor Glenn Stevens speech on Tuesday. The short term trend is slightly bullish as long as support 0.7560 (7 day EMA) holds. On the higher side major resistance is around 0.7680 and break above targets 0.7725/0.7750. The minor resistance is around 0.7650, while major support is around 0.7560 and break below will drag the pair till 0.7500/0.7430.
NZD/USD: The New Zealand dollar slumped to a low of 0.6746 after hitting a 5-month high of $0.6874 on Friday. The Kiwi's losses came as the U.S. dollar edged up after two straight days of selling. The pair has recovered from the steep fall and trades around 0.6783. On the upside, immediate support is located at 0.6721 (10-DMA), while on the down side, resistance is seen at 0.6809 (Mar 9 High).
Equities Recap
European shares gained, shrugging off a retreat in oil on concerns over excess supply, as gains in Chinese shares and U.S. interest rate outlook strengthened the investors confidence.
The pan-European FTSEurofirst 300 stocks index reversed early losses in basic resources companies to trade up 0.2 percent. Germany's DAX soared 1.12 pct, while both France's CAC and UK's FTSE advanced 0.18 pct.
MSCI's broadest index of Asia-Pacific shares outside Japan nudged up 0.1 percent after entering positive territory for the first time this year on Friday. Japan Markets remained closed.
Shanghai Composite index gained 2.2 pct at 3,018.80 points, while China's CSI300 index advanced 2.4 pct at 3,249.44 points. HK’s Hang Seng index edged up 0.1 pct at 20,684.15 points
Commodities Recap
Oil prices declined for a second session, under pressure from signs that some of the U.S. producers increased drilling last week and from uncertainty surrounding a meeting of the world's major exporters next month to discuss freezing output. Brent crude futures were down at $41.726 a barrel by 1024 GMT, having hit a 2016 high of $42.54 last week, while U.S. futures fell 68 cents to $38.76.
Spot gold slumped by 1 percent and trades around $1,244.77 a tonne by 1027 GMT, having finished last week a tad higher. Prices are consolidating below a 14-month peak of $1,282.51 struck on March 11, which was the highest since Jan 2015. U.S. gold eased by 0.9 percent to $1,243.20.
Treasuries Recap
The U.S. 10-Year Treasuries Yield stood at 1.8785 percent up by 0.007 bps.
Eurozne Bonds are little changed after very quiet trading overnight. The June contract has marked a range of 129-15/129-10.5, last at 129-13.5. Bunds are slightly higher, with 10-year futures up about ¼ point from their open and almost ½ point from Friday's settle. The 10-year Italian bonds are little changed to Bunds, 10-year Spanish bonds are modestly wider, and 10-year French bonds are marginally tighter.
JGB prices ended the day higher across the curve, with the benchmark 10-yr and 20-yr JGB yields briefly hitting their fresh record lows of -0.135% and -0.29%, respectively. The yield spreads in the 10-yr to 25-yr zone stood at -14.7bp to -6bp, sharply larger than -2bp to -5bp for the morning close in the 10-yr to 30-yr zone. The 25-yr to 40-yr zone also stood at -24bp to -13.5bp.
Gilts opened 5 ticks higher than the settlement of 120.67 as traders adopted a cautious tone ahead of Inflation and retail sales data.
Australian government bond futures eased, with the 3-year bond contract off 3 ticks at 98.040. The 10-year contract also shed 3 ticks to 97.4200, while the 20-year contract slipped 3.5 ticks to 96.8500. The spread between 10-year and 3-year government bonds widened to 61 basis points, having earlier shrunk to the smallest in nearly a year. New Zealand government bonds rose, sending yields 1 basis point lower along the curve.
