Thursday 2nd April: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 1.80 %, Shanghai Composite rose 0.20 %, Hang Seng gained 0.35 %, ASX rallied 0.70 %
  • Commodities: Gold at $1203.60 (-0.40 %), Silver at $16.93 (-0.75 %), WTI Oil at $49.60 (-1.00 %), Brent Oil at $56.65 (-0.20 %)
  • Rates: US 10 year yield at 1.873, UK 10 year yield at 1.55, German 10 year yield at 0.174

News & Data:

  • Australia MI Inflation Gauge 0.4 %, Previous: 0.0 %
  • Australia Trade Balance -A$1.25bln, Expected: -A$1.30bln, Previous: -A$1.0bln
  • Australia Exports 1.0 %, Previous: 1.0 %
  • Australia Imports 2.0 %, Previous: 3.0 %
  • New Zealand ANZ Commodity Price Index 4.6 %, Previous: 4.2 %
  • World Dairy Prices Slide 10.8% On Supply Concerns — Herald
  • Greek Labour Minister: Greece Has Enough Cash Until End-April — BBG
  • Australia’s Triple-A Credit Rating Could Be At Risk, Warns JP Morgan — The Australian
  • Chances Of RBA Rate Cut Firm As Confidence Falls Away — SMH

Markets Update:

Soft US economic data released yesterday led to broad USD weakness and helped Gold to get back above the $1200 level. It was first ADP employment change that missed expectations, followed by a disappointing ISM Manufacturing PMI print. US data this week hasn’t been great so far and may lead to further USD weakness ahead of the important NFP release tomorrow. The economic calendar for today is rather light, with UK Construction PMI the main data release in the EU session, followed by US trade and jobless claims data in the US trading session.

EUR/USD rose towards 1.08, but failed to reach the level as worries about Greece continue to weigh on the currency. The pair has consolidated within a 1.0750-75 range in Asia and is likely to stay quiet ahead of the NFP. The key levels to watch are 1.0720 to the downside, where decent bids are reported, and 1.08 & 1.0845 to the topside. Stops in good size reported sub-1.0720 and through 1.0810.

GBP/USD remains choppy. It first broke out of its recent range and posted a fresh low at 1.4740, only to reverse the move and rally back above 1.48 after the weak US data. GBP sentiment is negative overall, as political risks are again in the spotlight. Selling rallies is still the favoured strategy and a move towards 1.4900/20 could provide a good opportunity to establish fresh short positions. To the downside, 1.4740 is now the key support level.

Quiet session for the USD/JPY as well, which had a 20 pips range overnight. It is unlikely we will see a major move pre-NFP in the pair, so further consolidation between 119.20 and 120.20 seems the most likely scenario. Decent selling interest reported in the 120.20-30 area, while solid support expected at 119.20/25, should we break sub-119.40.

A fresh record low for the AUD/NZD! The pair has fallen to a low of 1.0146 and there is not much support now until the big 1.00 level. The Aussie Dollar remains weak amid increased expectations of a RBA rate cut this month. AUD/USD failed to benefit from the USD weakness, but instead dropped to 0.7567, only 10 pips away from the current 2015 low.

Upcoming Events:

  • 09:30 GMT – UK Construction PMI (59.5)
  • 13:30 GMT – US Initial Jobless Claims
  • 13:30 GMT – US Trade Balance
  • 13:30 GMT – Canadian Trade Balance
  • 15:00 GMT – US Factory Orders (-0.4 % m/m)

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