Market Roundup
- UK government wins parliament’s approval for Article 50 legislation –Reuters.
- UK BrexitMin Davis - To begin EU exit by end of month after parliament’s approval – Reuters.
- UK May wins right to launch EU divorce talks, question is when? Spokesman hints end-March – Reuters.
- UK PM May to reject Scottish referendum demand – Times, Reuters.
- UK firms scale back on hiring plans ahead of Brexit – Manpower.
- US TsySec Mnuchin to push hard for US interests at G20, G20 must refrain from competitive currency devaluations – Reuters.
- China Stats Bureau – Economic activity, business environment has improved, PPI gains to slow from current peak, CPI to show mild increases - Reuters.
- China Jan-Feb combined industrial output +6.3% y/y, +6.2% forecast.
- China Jan-Feb combined retail sales +9.5% y/y, +10.5% forecast.
- China Jan-Feb combined fixed asset investment +8.9% y/y, +8.2% forecast, private sector FAI +6.7%, property investment +8.9%, construction starts +10.4%, property sales by floor area +25.1%.
- RBA AsstGov Bullock – Regulators ready to act on home lending risks –Reuters.
- Australia Feb NAB business conditions index +9, confidence +7, Jan +16, +10, off from decade highs, activity above average across most sectors.
Economic Data Ahead
- (0200 ET/0700 GMT) Germany Feb CPI - final, +0.6% m/m, +2.2% y/y forecast; flash +0.6%, +2.2%.
- (0200 ET/0700 GMT) Germany Feb HICP – final, +0.7% m/m, +2.1% y/y forecast; flash +0.7%, +2.2%.
- (0300 ET/0800 GMT) Spain Feb CPI, -0.3% m/m, +3.0% y/y forecast; last -0.5%, flash +3.0%.
- (0300 ET/0800 GMT) Spain Feb HICP, -0.3% m/m, +3.0% y/y forecast; last -1.0%, flash +3.0%.
- (0330 ET/0830 GMT) Sweden Feb CPI, +0.6% m/m, +1.7% y/y forecast; last -0.7%, +1.4%.
- (0330 ET/0830 GMT) Sweden Feb CPIF, +0.6% m/m, +1.9% y/y forecast; last -0.7%, +1.6%.
- (0500 ET/1000 GMT) Eurozone Jan industrial output, +1.3% m/m, +0.9% y/y forecast; last -1.6%, +2.0%.
- (0500 ET/1000 GMT) Germany Mar ZEW expectations index, 13 forecast; last 10.4.
- (0500 ET/1000 GMT) Germany Mar ZEW current conditions index, 78 forecast; last 76.4.
- (0500 ET/1000 GMT) United States Feb NFIB business optimism index, 105.6 forecast; last 105.9.
- (0730 ET/1230 GMT) United States Feb PPI final demand, +0.1% m/m, +2.0% y/y forecast; last +0.6%, +1.6%.
- (0730 ET/1230 GMT) United States Feb – ex-food/energy, +0.2% m/m, +1.5% y/y forecast; last +0.4%, +1.2%.
- (1645 ET/2145 GMT) New Zealand Q4 c/a balance, NZ$2.54 bln deficit; last NZ$4.89 bln deficit.
Key Events Ahead
- N/A China National People’s Congress.
- N/A Cape Town BAML Sun City conference (till March 16).
- (0400 ET/0900 GMT) Riksbank Gov Ingves, DepGov Ohlsson Riksdag testimony.
- (0400 ET/0900 GMT) Netherlands E2-3 bln zero% 2022 DSL auction.
- (0430 ET/0930 GMT) ECB zero% 7-day refi, E23.5 billion allotment forecast, E23.9 bln maturing.
- (0430 ET/0930 GMT) Spain 3 and 9-month treasury bill auctions.
- (0530 ET/1030 GMT) UK DMO GBP2.25 bln 1.25% 2027 Gilt auction.
- (0600 ET/1100 GMT) London BAML European FinTech conference.
- (0845 ET/1345 GMT) Riksbank DepGov Jansson in Stockholm panel discussion on the economy.
- (0930 ET/1430 GMT) ECB Pres Draghi speaks at Frankfurt ECB/MIT conference (final day).
- N/A FOMC begins two-day policy meeting.
- N/A German Chanc Merkel meeting with US Pres Trump in Washington, DC.
FX Beat
DXY: The dollar gained versus its major peers as U.S. Treasury yields resumed their rise ahead of an expected interest rate hike by the Federal Reserve. The greenback against a basket of currencies traded flat at 101.37, having hit a low of 101.01 the day before, its lowest since Feb. 28. FxWirePro's Hourly Dollar Strength Index stood at -84.73 (Slightly Bearish) by 0500 GMT.
EUR/USD: The euro steadied after retreating from a one-month high hit in the previous session on dovish comments from European Central Bank officials. Trading activity around the major remained muted as investors were cautious ahead of Wednesday’s FOMC decision and Yellen’s press conference. The European currency traded 0.03 percent higher at 1.0654, having hit a high of 1.0714 the day before, its highest since Feb. 7. FxWirePro's Hourly Euro Strength Index stood at 63.00 (Bullish) by 0400 GMT. Investors now await Eurozone industrial production and ZEW Economic Sentiment Survey, ahead of the U.S. economic fundamentals. Immediate resistance is located at 1.0675, a break above targets 1.0700. On the downside, support is seen at 1.0669 (23.6% retrace of 1.0714 and 1.0525), a break below could drag it near 1.0619 (50% retrace).
USD/JPY: The dollar edged down as investors remained cautious ahead of a two-day Federal Reserve meeting later in the session. Moreover, the aftermath of mixed Chinese macro news, while developments on the Brexit process and Dutch elections triggered a risk-off wave that supported the Japanese safe-haven yen. The pair traded 0.03 percent down at 114.84, having hit a high of 115.50 on Friday, its highest since Jan. 19. FxWirePro's Hourly Yen Strength Index stood at -67.13 (Bearish) by 0400 GMT. Investors’ will continue to track price action in the U.S. Treasury yields, ahead of the U.S. producer price index and the Labour Market Conditions Index. Immediate resistance is located at 115.10, a break above targets 115.50/115.75. On the downside, support is seen at 114.58 (5-DMA), a break below could take it lower 114.17 (10-DMA).
GBP/USD: Sterling eased after rising to a 6-day high in the previous session following Scotland's First Minister Nicola Sturgeon demand for a fresh Scottish independence referendum in late 2018. The UK Parliament has passed the Brexit bill, allowing the government to trigger Article 50 and begin talks with EU. Sterling trades 0.1 percent lower at 1.2204, having hit a low of 1.2132 last week, its weakest since Jan. 17. FxWirePro's Hourly Sterling Strength Index stood at 60.19 (Bullish) by 0400 GMT. Investors’ focus will remain on developments surrounding the Brexit process, ahead of the UK leading economic index for further clues on the pair. Immediate resistance is located at 1.2236 (23.6 % retracement of 1.2569 and 1.2132), a break above could take it near 1.2300. On the downside, support is seen at 1.2182 (5-DMA), a break below targets 1.2130. Against the euro, the pound trades 0.1 percent down at 87.29 pence, having hit a fresh 8-week low of 87.87 the day before.
AUD/USD: The Australian dollar declined after a survey on domestic business conditions and mixed Chinese economic data disappointed investors' sentiment. National Australia Bank's index of business conditions dropped to 9 in February versus previous 16, while business confidence index fell to 7 from a prior reading of 10. The major trades 0.1 percent down at 0.7562, having touched a high of 0.7592 on Monday, it’s highest since Mar. 8. FxWirePro's Hourly Aussie Strength Index stood at 120.95 (Highly Bullish) by 0500 GMT. Markets will continue to digest downbeat domestic data, ahead of the U.S. PPI and LMCI figures. Immediate support is seen at 0.7544 (5-DMA), a break below targets 0.7500. On the upside, resistance is located at 0.7601 (78.6 % retracement of 0.7632 and 0.7491), a break above could take it till 0.7632 (21-DMA).
NZD/USD: The New Zealand dollar tumbled, extending previous session losses following the release of mixed Chinese data. China’s macro fundamentals showed that the industrial production and urban investment data bettered expectations in January at 6.3 y/y percent and 8.9 y/y percent respectively, while the retail sales came in at 9.5 percent y/y, missing the estimate of 10.5 percent. The pair trades lower at 0.6923, after falling as low as 0.6890 last week, it’s lowest since Jan. 4. FxWirePro's Hourly Kiwi Strength Index was at -39.73 (Neutral) by 0500 GMT. Investors’ will continue to track board based market sentiment, ahead of the U.S. macroeconomic drivers for further momentum. Immediate resistance is located at 0.6950 (Previous Session High), a break above could take it near 0.6973 (23.6% retrace of 0.7244 and 0.6890)/ 0.7005 (10-DMA). On the downside, support is seen at 0.6890 (Mar 10 Low), a break below could drag it near 0.6850.
Equities Recap
Asian shares advanced after data showed Chinese fixed-asset investment and industrial output grew, beating forecasts, while as investors await the commencement of a two-day Federal Reserve meeting.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent.
Tokyo's Nikkei gained 0.11 percent to 19,612.23 points, Australia's S&P/ASX 200 index fell 0.05 percent to 5,754.20 points and South Korea's KOSPI was trading 0.65 percent up at 2,132.41 points.
Shanghai composite index edged up 0.05 percent to 3,239.23 points, while CSI300 index was trading 0.07 percent down at 3,455.73 points.
Hong Kong’s Hang Seng was trading 0.01 percent lower at 23,824.06 points. Taiwan shares added 0.5 percent at 9,744.21 points.
Commodities Recap
Crude oil prices steadied after declining to near three-month lows in the previous session, while investors await key reports and data for further insights on a supply overhang in the global market. International benchmark Brent crude was trading flat at $51.39 per barrel by 0412 GMT, having hit a low of $50.88 in the previous session, its lowest since Nov. 30. U.S. West Texas Intermediate crude were little changed at $48.41 a barrel, after falling to a trough of $47.94 on Monday, its weakest since Nov end.
Gold prices eased as investors awaited the commencement of a two-day Federal Reserve meeting later in the session, where the U.S. central bank is widely expected to hike interest rates. Spot gold edged down 0.1 percent to $1,203.36 per ounce by 0415 GMT, having tumbled to its weakest since Jan. 31 at $1,194.86 on Friday. U.S. gold futures were down 0.1 percent at $1,202 per ounce.
Treasuries Recap
The 10-year U.S treasury yield stood at 2.6112 percent higher by 0.004 bps, while 5-year yield was 0.002 bps up at 2.1302 percent.
The Australian bonds rallied followed by weak business conditions across sectors that lent demand towards safe-haven buying. The yield on the benchmark 10-year Treasury note fell 1/2 basis point to 2.94 percent, the yield on 15-year note dived 1 basis point to 3.33 percent and the yield on short-term 2-year also traded 1 basis point lower at 1.89 percent.
The New Zealand government bonds ended the session on a firm footing, following expectations of weakness in the country’s fourth-quarter gross domestic product (GDP), scheduled to be released on March 16. The yield on the benchmark 10-year bond plunged 2 basis points to 3.37 percent at the time of closing, the yield on 7-year note dipped 1-1/2 basis points to 2.93 percent while the yield on short-term 2-year note traded 2 basis points lower at 2.17 percent.
Canadian government bond prices were lower across the yield curve, with the 2-year down 6 Canadian cents to yield 0.875 percent and the 10-year falling 49 Canadian cents to yield 1.871 percent. The 10-year yield touched its highest since June 2015 at 1.876 percent.
