Thursday 25th March: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei down 0.25 %, Shanghai Composite lost 1.05 %, Hang Seng gained 0.50 %, ASX declined 0.05 %
  • Commodities: Gold at $1189 (-0.20 %), Silver at $16.92 (-0.40 %), WTI Oil at $47.38 (-0.30 %), Brent Oil at $55.10 (-0.15 %)
  • Rates: US 10 year yield at 1.877, UK 10 year yield at 1.49, German 10 year yield at 0.228

News & Data:

  • New Zealand Trade Balance -NZ$2.18bln y/y, Expected: -NZ$1.82bln, Previous: -NZ$1.43bln
  • New Zealand Trade Balance NZ$50mln m/m, Expected: NZ$392mln, Previous: NZ$33mln
  • New Zealand Exports NZ$3.92bln, Expected: NZ$4.09bln, Previous: NZ$3.68bln
  • New Zealand Imports NZ$3.87bln, Expected: NZ$3.75bln, Previous: NZ$3.64bln
  • Fonterra: Concerned About The Impact Of Global Instability On Dairy Demand — RTRS
  • Bank of Japan’s Stock Portfolio Swells To JPY10 trillion — Nikkei
  • Bank of Japan’s Iwata: Hard To Achieve 2% Inflation Strictly In 2 Years — Asahi
  • Brazil To End FX Intervention Program On 31 March — BBG
  • Bank of England Deputy Governor Shafik: Interest Rates Still Likely To Rise — KM
  • China Westpac-MNI Consumer Sentiment (March) 114.7 (previous 112.0)
  • PBOC Fixes Yuan At 6.1410 (previous 6.1398)

Markets Update:

US stock markets closed lower on the day and Asian equities are mostly weaker this morning as well. Precious metals have weakened somewhat as the US Dollar regained some strength in the Asian session. Meanwhile, Oil remains volatile as traders focus on the US-Iran talks. Iran already said that it would be able to resume crude oil exports swiftly if sanctions were lifted.

In the FX market, the USD appreciated against most major currencies. EUR/USD had a spike to 1.1030 after yesterday’s US CPI release, but quickly reversed and retested the daily low at 1.0885 shortly after. GBP/USD weakened after the soft UK CPI print and extended losses towards 1.4831. Key support now noted at 1.4720 and then 1.4685/90. Meanwhile, price action in USD/JPY still looks quite bearish and it is expected that we’ll see further weakness into the end of the Japanese fiscal year. Dealers report selling interest in good size towards 120.20, while support expected in the 119.20-25 area.

New Zealand trade data missed expectations, but that did not have much of an impact on the Kiwi Dollar. NZD/USD spent the Asian session in a 0.7620-60 range. AUD/USD consolidated after it failed to sustain momentum above 0.79. Intraday support seen at 0.7835, with not much tech support until 0.7760 should we break below that level. It is also worth noting that EUR/CHF has fallen back below the 1.05 level yesterday. There was a story in a Swiss newspaper a month ago about the SNB operating an unofficial corridor of 1.05-1.10 in the pair, but given that the bank has lost much of its credibility after dropping the 1.20 floor, the market does not seem to care much about it. However, it is worth keeping an eye on the price action in the 1.04-1.05 area.

Looking ahead, the main events of the day will be the German IFO releases at 0900 GMT and US Durable Goods Orders at 1230 GMT.

Upcoming Events:

  • 07:00 GMT – Swiss Consumption Indicator
  • 08:00 GMT – Swedish Consumer Confidence
  • 09:00 GMT – German IFO Business Expectations (103.0)
  • 09:00 GMT – German IFO Business Climate (107.3)
  • 09:00 GMT – German IFO Current Assessment (112.0)
  • 10:30 GMT – Chicago Fed President Evans speaks
  • 12:30 GMT – US Core Durable Goods Orders (0.3 % m/m)
  • 12:30 GMT – US Durable Goods Orders (0.3 % m/m)
  • 14:30 GMT – US Crude Oil Inventories

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