Monday 16th February: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 0.60 %, Shanghai Composite gained 0.20 %, Hang Seng rose 0.30 %, ASX is 0.15 % higher
• Commodities: Gold at $1231.50 (+0.35 %), Silver at $17.31 (+0.10 %), WTI Oil at $53.45 (-0.40 %), Brent Oil at $61.35 (-0.30 %)
• Rates: US 10 year yield at 2.047, UK 10 year yield at 1.685, German 10 year yield at 0.355

News & Data:

• New Zealand Retail Sales 1.7 % q/q, Expected: 1.3 %, Previous: 1.5 %
• New Zealand Core Retail Sales 1.5 % q/q, Expected: 1.1 %, Previous: 1.4 %
• Japan GDP 0.6 % q/q, Expected: 0.9 %, Previous: -0.5 %
• Japan GDP 2.2 % y/y, Expected: 3.7 %, Previous: -1.9 %
• Japan GDP Price Index 2.3 % y/y, Expected: 1.9 %, Previous: 2.0 %
• Japan GDP Private Consumption 0.3 % q/q, Expected: 0.7 %, Previous: 0.4 %
• Japan Industrial Production 0.8 % m/m, Expected: 1.0 %, Previous: 1.0 %
• Australia New Motor Vehicle Sales -1.5 % m/m, Previous: 3.0 %
• China FDI 29.4 %, Previous: 1.70 %

CFTC Positioning Update:

• EUR net short 195k vs net short 196k previous
• GBP net short 39k vs net short 42k previous
• JPY net short 55k vs net short 60k previous
• AUD net short 53k vs net short 56k previous
• CAD net short 33k vs net short 27k previous
• CHF net short 5k vs net short 5k previous

Markets Update:

EUR/USD opened around 1.1395 on Sunday and spent most of the Asian session in a 1.14-1.1420 range. The EuroGroup finance ministers are meeting again today to discuss Greece and price action in the EUR pairs is likely to remain quiet until then. GBP/USD started the week about 40 pips higher from the Friday close after some hawkish comments from a MPC member over the weekend. Key support now at 1.5350, with the next major resistance level seen at 1.55.

USD/JPY is under pressure again. The 118.30 support level held once again, but price action looks weak and it seems like we will see a break lower quite soon. GDP data out of Japan was bad, with the quarter-on-quarter figure at 0.6 % vs 0.9 % expected. A break sub-118.30 would pave the way for a test of the 117.20/30 support area.

The commodity currencies were well bid overnight. The New Zealand Dollar rallied after strong retail sales data, which helped the Aussie Dollar to rise vs the USD as well. NZD/USD made it above 0.75 and the next major resistance level lies now at 0.7620. AUD/USD almost hit 0.78 overnight as the short covering continues. USD/CAD is trading lower amid broad USD weakness and rising Oil prices.

Looking ahead, there are no important data releases today, so the focus will be on the EuroGroup meeting. In the US, there is a public holiday (Presidents‘ Day).

Upcoming Events:

• 09:00 GMT – Spanish Trade Balance (-€2bln)
• 10:00 GMT – Euro Zone Trade Balance (€20.5bln)

The Week Ahead (key data/events):

Tuesday, February 17th

• 09:30 GMT – UK CPI (-0.8 % m/m, 0.3 % y/y)
• 09:30 GMT – UK Core CPI (1.3 % y/y)
• 10:00 GMT – German ZEW Economic Sentiment (56.0)
• 10:00 GMT – German ZEW Current Conditions (30.0)
• 13:30 GMT – US NY Empire State Manufacturing Index (9.00)
• 17:00 GMT – SNB Chairman Jordan speaks

Wednesday, February 18th

• 09:30 GMT – UK Claimant Count Change (-25k)
• 09:30 GMT – UK Average Earnings (1.7 %)
• 09:30 GMT – UK Unemployment Rate (5.8 %)
• 09:30 GMT – Bank of England Meeting Minutes
• 13:30 GMT – US PPI (-0.4 % m/m, 0.3 % y/y)
• 14:15 GMT – US Industrial Production (0.3 % m/m)
• 14:15 GMT – US Manufacturing Production (0.3 % m/m)
• 19:00 GMT – FOMC Meeting Minutes

Thursday, February 19th

• 09:00 GMT – Euro Zone Current Account (€23.3bln)
• 13:30 GMT – US Initial Jobless Claims (305k)
• 15:00 GMT – US Philadelphia Fed Manufacturing Index (10.0)
• 15:00 GMT – US CB Leading Index (0.3 % m/m)

Friday, February 20th

• 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 Retail Sales (-0.2 % m/m, 6.0 % y/y)
• 13:30 GMT – Canadian Retail Sales (-0.3 % m/m)
• 14:45 GMT – US Manufacturing PMI (53.8)

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