Market Roundup
- Dollar index hits new highs since 2003 at 100.060 before easing.
- EUR/USD rises to 1.0644 after new 12 year 1.0494 low in Asia.
- Against sterling, the euro fell to its lowest in over seven years at 70.11 pence.
- France Hollande: EUR is now at right level.
- ECB's Coeure says QE is working, there is no doubt it will work; Greek bonds can be eligible in QE bond-buying plan as soon as possible but must first conclude bailout review; lower euro is logical consequence of diverging EU, us monetary policies.
- China central bank Governor: Choppy global environment added to yuan volatility in 2014; good signal for world economy if fed raises rates.
- China central bank Dep Governor: Pro-active fiscal policy, prudent monetary policy will combat falling prices.
- China new employment data to include breakdown of unemployment, labour participation rates from 2016.
- France Feb Inflation Ex-Tobacco mm increases to 0.7 % vs previous -1.0 %.
- France Feb CPI (EU norm) final yy increases to -0.3 % (consensus -0.4 %) vs previous -0.4 %.
- France Feb CPI (EU norm) final mm increases to 0.7 % (consensus 0.6 %) vs previous -1.1 %.
- Germany Feb HICP final yy stays flat at -0.1 % (consensus -0.1 %) vs previous -0.1 %.
- Germany Feb CPI final mm stays flat at 0.9 % (consensus 0.9 %) vs previous 0.9 %.
- China Feb Outstanding Loan Growth increases to +14.3 % (consensus 13.8 %) vs previous 13.9%.
- China Feb M2 Money Supply yy increases to +12.5 % (consensus 11.0 %) vs previous 10.8 %.
Economic Data Ahead
- (0930 EDT/1330 GMT) US Initial Claims (week March 7) consensus 305k, previous 313k.
- (0930 EDT/1330 GMT) US Continued Claims (week Feb 28) consensus 2.400 mln, previous 2.401 mln.
- (0930 EDT/1330 GMT) US Retail Sales (Feb) consensus +0.3% m/m, previous -0.8% m/m.
- (0930 EDT/1330 GMT) US Ex Autos Retail Sales (Feb) consensus +0.5% m/m, previous -0.9% m/m.
- (0930 EDT/1330 GMT) US Control Group Retail Sales (Feb) consensus +0.4% m/m, previous +0.1% m/m.
- (0930 EDT/1330 GMT) US Import Price Index (Feb) consensus +0.2% m/m, previous -2.8% m/m.
- (0930 EDT/1330 GMT) US Export Price Index (Feb) consensus -0.2% m/m, previous -2.0% m/m.
- (1100 EDT/1500 GMT) US Business Inventories (Jan) consensus +0.1% m/m, previous +0.1% m/m.
- (1300 EDT/1700 GMT) US Flow of Funds (Q4).
Key Events Ahead
- (0845 EDT/1245 GMT) BoE Gov Carney speech in Sheffield.
- (1300 EDT/1700 GMT)German FinMin Schaeuble, Austria Schelling in Vienna panel discussion.
- (1500 EDT/1900 GMT) ECB Coeure speaks with French journalists in Paris.
FX Recap
EUR/USD is still reeling under the effect of ECB QE. It dropped below the 1.05 handle to 1.0493 levels; however, it subsequently consolidated and currently trades at 1.0644 levels. Pair is likely to find strong support at 1.05 levels and then at 1.0375 levels. On the other hand, resistance is seen at 1.1185 levels. Option expiries at 1.0600 (140M).
USD/JPY recovered slightly yesterday after making a low of 121.18. Overall trend is bullish as long as support 120.48 (23.6% retracement of 115.55 and 122.01) holds. On the downside minor support is around 121 and any break below will target 120.50/119.90 (200 day HMA). The pair's minor resistance is around 122.20 and above that level it will reach 123/124.13. Option expiries at 120.50 (650M), 120.75 (200M), 121.00 (268M), 121.85 (500M).
AUD/USD hit 0.7674 in Asia, it's highest since March 10 and it later consolidated to 0.7672, rising 0.99%. On the downside, it is likely to find support at 0.7558 levels. On the upside, resistance is seen at 0.7853. Option expiries at 0.7600 (200M), 0.7700 (782M).
USD/CHF climbed to 1.0128 highs in late Asian session taking out 1.1018 on route. Replicating the rally seen in EUR/USD, the spot was sold back to 0.9997 levels in London. The fall below parity, however, was temporary as prices bounced and the trend stayed with the bulls. Pair sees strong resistance at 1.0240 (2015 high). EUR/CHF remained on the back foot and trades in 1.0624/65 range.
GBP/USD has formed Bullish divergence in daily chart and this confirms short term bounce back till 1.5100 cannot be ruled out. It has broken major support 1.4950 (Jan 23rd 2015 low) and declined till 1.4891. Any break below 1.4890 will drag the pair further down till 1.48124 (2013 low). On the upside pair's minor resistance is around 1.4985 and nay break above will target 1.5045/1.5100. Short term bullishness only above 1.5150 levels. EUR/GBP remained subdued in Europe at 0.7069 levels following the release of Euro zone industrial output numbers which doubled its growth on the year-on-year basis in January.
