Wednesday 4th March: European Open Briefing

Global Markets:

  • Asian stock markets: Nikkei down 0.50 %, Shanghai Composite fell 0.20 %, Hang Seng declined 0.40 %, ASX lost 0.50 %
  • Commodities: Gold at $1207 (+0.20 %), Silver at $16.32 (+0.15 %), WTI Oil at $50.55 (+0.05 %), Brent Oil at $60.72 (-0.60 %)
  • Rates: US 10 year yield at 2.133, UK 10 year yield at 1.847, German 10 year yield at 0.377

News & Data:

  • Australia GDP 0.5 % q/q, Expected: 0.5 %, Previous: 0.4 %
  • Australia GDP 2.5 % y/y, Expected: 2.5 %, Previous: 2.7 %
  • Australia AiG Services Index 0.5 %, Expected: 0.6 %, Previous: 0.3 %
  • China HSBC Services PMI 52.0, Previous: 51.8
  • Japan Markit Services PMI 48.5, Previous: 51.3
  • Australian Treasurer Hockey: Growth Doing Well Given Transition From Mining Spending — BBG
  • Japan FinMin Aso: Economic Trend Is Recovering — BBG
  • BOJ Governor Kuroda: Falling oil prices good for economy in longer term
  • Kuroda: CPI likely to reach 2% in/around fiscal 2015
  • Kuroda: Will continue to ease until 2% inflation stable
  • Kuroda: Will check risks and make adjustments as needed
  • Reserve Bank of India (RBI): Cuts rates to 7.5% from 7.75%
  • RBI: Pre-emptive action guided by weak economic indicators
  • RBI: Excessively strong INR is undesirable – spurs disinflation

Markets Update:

It was a very quiet Asian session, but with the US Dollar slightly bid. USD/CAD dropped sharply in yesterday’s NY session, after Canadian GDP beat expectations, but it recovered quickly and is trading back above 1.25. Price action suggests further gains are ahead and we should see the 1.2550/60 resistance getting tested soon. AUD/USD is still above 0.78, but upside momentum failed to build after the RBA left rates unchanged. The market sees an April rate cut as very likely and hence demand for the Aussie Dollar is rather weak. It would take USD weakness across the board to trigger a larger short squeeze in AUD/USD and push it towards 0.80. Meanwhile, NZD/USD is doing a bit better after the Fonterra auction yesterday. While the NZD has been well bid for a while now, the pair faces heavy resistance in the 0.7615/20 area and it will not be an easy target for bulls.

EUR/USD traded in a 1.1165-85 session. Offers are reported at 1.1240 and in better size towards 1.1270/80, with leveraged names still having large selling interest in the pair. GBP/USD is slowly approaching the pivotal 1.5315-30 support area and clear break lower would pave the way for a move down to 1.52. USD/JPY is expected to find good support at 119.30, while intraday resistance is seen at 120.30 and then 120.50.

Looking ahead, the focus today will be on Euro Zone & UK Services PMI and the Bank of Canada rate decision.

Upcoming Events:

  • 08:15 GMT – Spanish Services PMI (56.9)
  • 08:45 GMT – Italian Services PMI (51.4)
  • 08:50 GMT – French Services PMI (53.4)
  • 08:55 GMT – German Services PMI (55.5)
  • 09:00 GMT – Euro Zone Services PMI (57.5)
  • 09:30 GMT – UK Services PMI (57.5)
  • 10:00 GMT – Euro Zone Retail Sales (0.1 % m/m)
  • 13:15 GMT – US ADP Nonfarm Employment Change (220k)
  • 14:45 GMT – US Markit Services PMI
  • 15:00 GMT – US ISM Non-Manufacturing PMI (56.5)
  • 15:00 GMT – Bank of Canada Interest Rate Decision (1.00 %)

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