Friday 6th February: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.80 %, Shanghai Composite declined 1.20 %, Hang Seng fell 0.15 %, ASX gained 0.20 %
  • Commodities: Gold at $1267 (+0.40 %), Silver at $17.30 (+0.60 %), WTI Oil at $51.20 (+1.40 %), Brent Oil at $57.15 (+1.00 %)
  • Rates: US 10 year yield at 1.815, UK 10 year yield at 1.538, German 10 year yield at 0.366

News & Data:

  • Japan Leading Index 1.5 %, Previous: -0.7 %
  • Japan Leading Index 105.2, Expected: 105.5, Previous: 103.9
  • Japan Foreign Reserves $1.26bln, Previous: $1.26bln
  • Australia AIG Construction Index 45.9, Previous: 44.4
  • RBA lowers GDP growth, inflation forecasts for 2015
  • RBA says AUD above most estimates of fundamental value
  • RBA says February rate cut to support demand, foster sustainable growth
  • RBA says it sees delay in pickup of consumption, non-mining investment
  • RBA says housing market developments to be watched carefully
  • US Lifts Asia: Asian stocks follow US shares higher, Oil resumes rebound (BBG)
  • PBOC uses Yuan fixing to force appreciation as bearish bets jump (BBG)

Markets Update:

It was a rather quiet trading session overnight, with traders waiting for the NFP release at 1330 GMT. The RBA released its meeting minutes and it was in line with the comments made after the rate decision on Tuesday. There were no surprises in the minutes, but it seems that the market was positioned for even more dovish comments, as AUD/USD rallied 60 pips shortly after the release. It fell back to 0.7810 later, but is now back around 0.7840 as we are heading towards the European open. The AUD demand boosted NZD/USD as well, with the pair now slowly approaching the Wednesday high at 0.7440. Meanwhile, the Canadian Dollar is again benefiting from the bounce in Oil prices. USD/CAD short-term positioning is still quite crowded, so a weak NFP could accelerate downside momentum and lead to a 1.23 test.

EUR/USD was stuck in a 1.1460-85 range overnight. The renewed problems with Greece are not having a large impact on FX markets as of yet, but will remain an important theme over the coming weeks. GBP/USD is now up 330 pips on the week and remains very well bid. The charts suggest that there is no significant resistance until 1.55, while key support now noted at 1.5225. USD/JPY continues to consolidate in an even tighter range and it is unlikely we’ll see the pair moving much until the US employment numbers.

Upcoming Events:

  • 07:00 GMT – German Industrial Production (0.4 % m/m)
  • 07:45 GMT – French Trade Balance (-€3.1bln)
  • 08:15 GMT – Swiss Retail Sales (0.4 % y/y)
  • 09:30 GMT – UK Trade Balance (-£9.10bln)
  • 13:30 GMT – US Nonfarm Payrolls (234k)
  • 13:30 GMT – US Unemployment Rate (5.6 %)
  • 13:30 GMT – US Average Hourly Earnings (0.3 % m/m)
  • 13:30 GMT – Canadian Employment Change (5.0k)
  • 13:30 GMT – Canadian Unemployment Rate (7.0 %)
  • 13:30 GMT – Canadian Building Permits (5.0 % m/m)

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