Thursday 5th March: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei up 0.15 %, Shanghai Composite fell 1.10 %, Hang Seng declined 0.95 %, ASX gained 0.05 %
  • Commodities: Gold at $1204 (+0.30 %), Silver at $16.26 (+0.70 %), WTI Oil at $51.70 (+0.30 %), Brent Oil at $60.60 (+0.50 %)
  • Rates: US 10 year yield at 2.115, UK 10 year yield at 1.883, German 10 year yield at 0.382

News & Data:

  • Australia Exports 1.0 %, Previous: 1.0 %
  • Australia Imports 3.0 %, Previous: -1.0 %
  • Australia Trade Balance -A$0.98bln, Expected: -A$0.95bln, Previous: -A$0.50bln
  • Australia Retail Sales 0.4 %, Expected: 0.4 %, Previous: 0.2 %
  • RBA Deputy Governor Lowe: Further easing maybe appropriate
  • Lowe: Still suspects AUD too high but is now a lot closer to where it needs to be
  • Lowe: Our intention is not to get AUD lower with policy but to get economy going
  • Bank of Japan’s Kiuchi: Economy is expected to continue moderate recovery
  • Kiuchi: Exports have been picking up
  • Kiuchi: 2% goal should be for mid to long term not 2 years
  • Kiuchi: Sees concern of higher risk BOJ perceived financing debt
  • Kiuchi: Additional easing to have limited effects
  • Kiuchi: Excessive easing to hurt growth
  • PBOC’s Shen: China Monetary Policy May Ease Further In Q2
  • China Economic Slowdown Poses Pressure To Bank Asset Quality — ICBC
  • China Premier Li: To Keep Monetary Policy Flexible To Maintain Stable Credit Growth — RTRS
  • China: Cuts 2015 GDP growth target to about 7%
  • China Li: 7% growth should generate sufficient employment
  • China: Cuts 2015 CPI target to around 3% from 3.5%
  • China: Sets 2015 M2 growth target at around 12% vs 13% in 2014
  • China: Sets 2015 trade growth target at around 6%
  • PBOC advisor: China to maintain neutral monetary policy to ensure GDP growth of 6-7% in 2015
  • PBOC advisor: Monetary policy depends on Q1 and Q2 economic data
  • PBOC advisor: Not necessary to widen Yuan trading band on 2015
  • PBOC advisor: To make breakthrough on interest rates liberalisation in 2015

Markets Update:

EUR/USD declined to fresh multi-year lows ahead of the ECB meeting today. Thought the market is not expecting any new policy announcement from the ECB, it may be perhaps related to QE starting next week. The bank is expected to announce the finer details of its QE programme today, with which it will purchase 60 billion Euros monthly until September 2016. We will also get updated economic forecasts and ECB President Draghi is likely to face questions about the debt financing negotiations with Greece. EUR/USD is currently trading at 1.1060 and the next major support level is seen at 1.10. Dealers report option-related demand ahead of that level, while to the topside, offers are now building in the 1.1140/50 area.

USD/JPY was under pressure yesterday as US stock markets were in the red, but the pair recovered overnight and is now approaching the 120.00 level. While Japanese Government officials expressed concerns about a too weak Yen recently, another wave of USD strength like yesterday is likely to push USD/JPY towards the pivotal 120.80 resistance level. One reason why we are not seeing the pair trading already higher might be cross flows, as leveraged funds were heavy sellers of EUR/JPY and GBP/JPY in the last few trading sessions.

Upcoming Events:

  • 12:00 GMT – Bank of England Interest Rate Decision (0.50 %)
  • 12:45 GMT – ECB Interest Rate Decision (0.05 %)
  • 13:30 GMT – ECB Press Conference
  • 13:30 GMT – US Initial Jobless Claims (319k)
  • 15:00 GMT – US Factory Orders (0.3 %)
  • 15:00 GMT – Canadian Ivey PMI (46.2)

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