Wednesday 11th February: European Open Brieifing

Global Markets:

• Asian stock markets: Nikkei down 0.30 %, Shanghai Composite gained 0.05 %, Hang Seng declined 1 %, ASX fell 0.50 %
• Commodities: Gold at $1238 (+0.45 %), Silver at $17.00 (+0.80 %), WTI Oil at $50.56 (+1.10 %), Brent Oil at $57.72 (-0.70 %)
• Rates: US 10 year yield at 2.004, UK 10 year yield at 1.671, German 10 year yield at 0.368

News & Data:

• Australia Westpac Consumer Sentiment 8.0 %, Previous: 2.4 %
• Australia Home Loans 2.7 % m/m, Expected: 2.0 %, Previous: -0.4 %
• Stocks, currencies count down to Greek meetings (RTRS)
• Higher yields support dollar, euro in focus before EU talks (RTRS)
• Turkish Lira Drops to All-Time Low Against Dollar (WSJ)
• Kuroda Signals Confidence on Easing With No G-20 Backlash on Yen (BBG)
• New Zealand Finance Minister: English: Budget will maintain spending restraint; will deliver budget on May 21
• English: Support RBNZ using range of macro prudential tools, leave judgment to RBNZ

Global Markets:

Asian equity markets are mostly lower, as traders are waiting for the meeting of the EuroGroup finance ministers on Greece. MNI reported yesterday that the EU commission has drafted a compromise plan for Greece, in which they propose a 6 month extension and a reorganization of the Troika. If a deal would be reached, the ECB would accept Greek sovereign bonds as collateral. Meanwhile, in the commodities space, Oil gave up some of the gains it made last week, amid renewed oversupply concerns. WTI briefly fell back below the $50 level, but is now consolidating around $50.50. Precious metals came under slight pressure amid a strengthening US Dollar, with Gold slowly moving towards the mid-January low of $1224 and Silver back below $17.

In FX, EUR/USD had some decent moves on the Greece headlines in the NY session, but stayed quiet overall. The pair was stuck in a 25 pips range in Asia and isn’t likely to move much until we see the first headlines from the EuroGroup meeting. GBP/USD continues to consolidate within 1.52 and 1.53. Overall, GBP-sentiment remains negative and the downtrend is likely to resume soon, but a positive outcome of the EG meeting could boost GBP/USD alongside the EUR/USD.

USD/JPY saw strong demand from leveraged funds, both in the European and the NY session. The pair reached a high of 119.60 in NY and extended gains overnight, with the intraday high currently at 119.65. Offers are expected ahead of 120.00, but the charts suggest the next major hurdle will be the 120.80-90 resistance area.

Upcoming Events:

• 09:00 GMT – Norway GDP (0.4 % q/q)
• 13:00 GMT – FOMC Member Fisher speaks
• 19:00 GMT – US Federal Budget Balance (-$10.0bln)
• 21:30 GMT – New Zealand Business PMI
• 22:00 GMT – RBA Assistant Governor Debelle speaks

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