Friday 20th February: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.80 %, Hang Seng gained 0.20 %, ASX declined 0.50 %, Shanghai Composite closed
  • Commodities: Gold at $1207 (-0.05 %), Silver at $16.44 (+0.40 %), WTI Oil at $52.32 (+0.95 %), Brent Oil at $60.65 (+1.00 %)
  • Rates: US 10 year yield at 2.11, UK 10 year yield at 1.831, German 10 year yield at 0.386

News & Data:

  • Japan Manufacturing PMI 51.5, Expected: 52.6, Previous: 52.2
  • BOJ Governor Kuroda says its very important to establish a sustainable fiscal structure
  • BOJ Governor Kuroda says that the country can realize 2% inflation target
  • BOJ Governor Kuroda says that he will pay sufficient attention to government bond market
  • US Treasury official says there is risk for the both the Eurozone and Global economies if Greece situation not mitigated

Markets Update:

EUR/USD price action remains very choppy amid the uncertainties about Greece. News that Greece has asked for a six month extension of its‘ loan programme led to a rally to 1.1450, but Germany rejected the Greece proposal only a few hours later, which brought EUR/USD back to 1.1350. There was also talk of SNB intervention in USD/CHF. Operating in the FX market in „stealth mode“ is one of the few options they have left, given that verbal intervention would not work, since the bank has lost a lot of credibility after dropping the 1.20 floor.

GBP/USD retraced a bit after hitting a high of 1.5480 post-FOMC, but is still holding above the 1.54 level. Pivotal support eyed at 1.5320, while next key resistance seen at 1.55. The charts suggest if we take out the 1.55 level, there will not be much tech resistance until 1.5620. USD/JPY made it back above 119.00, but failed to build significant upside momentum. The pair reached a high of 119.08 in Asia and has been consolidating in a 118.90-119.00 range since then.

After a strong start into the trading week, NZD and AUD are now struggling to extend gains against the USD, but remain well bid on dips, as we saw yesterday. Key support in NZD/USD at 0.7480 and at 0.7725/30 in AUD/USD. Meanwhile, the Canadian Dollar is weakening again amid declining Oil prices.

Looking ahead, the main events of the day will be UK Retail Sales at 0930 GMT and Canadian Retail Sales at 0930 GMT.

Upcoming Events:

  • 07:00 GMT – German PPI (-0.4 % m/m, -2.0 % y/y)
  • 08:00 GMT – French Manufacturing PMI (49.5)
  • 08:00 GMT – French Services PMI (49.8)
  • 08:30 GMT – German Manufacturing PMI (51.5)
  • 08:30 GMT – German Services PMI (54.3)
  • 09:00 GMT – Euro Zone Manufacturing PMI (51.5)
  • 09:00 GMT – Euro Zone Services PMI (53.0)
  • 09:30 GMT – UK Core Retail Sales (-0.3 % m/m, 5.9 % y/y)
  • 09:30 GMT – UK Retail Sales (-0.2 % m/m, 6.0 % y/y)
  • 10:00 GMT – Italian CPI (-0.4 % m/m, -0.6 % y/y)
  • 13:30 GMT – Canadian Retail Sales (-0.3 % m/m)
  • 13:30 GMT – Canadian Core Retail Sales (-0.7 % m/m)
  • 14:45 GMT – US Manufacturing PMI (53.8)

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