Market Roundup
- China to slash taxes, boost lending to shore up slowing economy
- U.S., China 'on the cusp' of possible end to trade war -Pompeo
- China commerce minister says U.S. trade talks have been difficult
- Trump plans to end India's preferential trade treatment
- U.S. intends to end preferential trade treatment for Turkey
- Second Canadian minister quits over scandal, Trudeau taking it 'seriously'
- UK shoppers slow their spending ahead of Brexit, some stockpile
- China's defence budget rise to outpace economic growth target
- China Feb Caixin Services PMI, 51.1, 53.6 prev
- Japan Feb Services PMI, 52.3, 51.6 prev
- Australia Mar RBA Cash Rate, 1.50%, 1.50% f’cast, 1.50% prev
- Australia Q4 Current Account Balance SA in AUD, -7.2 bln, -9.2 bln f’cast, -10.7 bln prev, -10.8 bln rvsd
- Australia Q4 Net Exports Contribution, -0.2%, -0.1% f’cast, 0.4% prev
Economic Data Ahead
- (0350 ET/0850 GMT) France Feb Markit Serv PMI, 49.8 f’cast, 49.8 prev
- (0350 ET/0850 GMT) France Feb Markit Comp PMI, 49.9 f’cast, 49.9 prev
- (0355 ET/0855 GMT) Germany Feb Markit Services PMI, 55.1 f’cast, 55.1 prev
- (0355 ET/0855 GMT) Germany Feb Markit Comp Final PMI, 52.7 f’cast, 52.7 prev
- (0400 ET/0900 GMT) EZ Feb Markit Serv Final PMI, 52.3 f’cast, 52.3 prev
- (0400 ET/0900 GMT) EZ Feb Markit Comp Final PMI, 51.4 f’cast, 51.4 prev
- (0430 ET/0930 GMT) Great Britain Feb Markit/CIPS Serv PMI, 49.9 f’cast, 50.1 prev
- (0500 ET/1000 GMT) EZ Jan Retail Sales MM, 1.2% f’cast, -1.6% prev
- (0500 ET/1000 GMT) EZ Jan Retail Sales YY, 1.9% f’cast, 0.8% prev
Key Events Ahead
- (0430 ET/0930 GMT) Bank of England's Financial Policy Committee statement from its Feb. 26 meeting in London
- (0730 ET/1230 GMT) Boston Fed President Eric Rosengren speaks on the current economic landscape in the US in Boston
- (0930 ET/1430 GMT) Minneapolis Fed President Neel Kashkari gives testimony before the Minnesota Senate Finance Committee in St. Paul, Minn
- (1035 ET/1535 GMT) BoE Governor Mark Carney participates in House of Lords Economic Affairs Committee hearing in London
- (1130 ET/1630 GMT) Richmond Fed President Thomas Barkin speaks at a conference in Richmond, Virginia
FX Beat
DXY: The dollar index rose, hovering towards a near 2-week peak touched in the previous session after U.S. President Donald Trump stated that he plans to end preferential trade treatment for India that allows duty-free entry for $5.6 billion worth of the country's exports to the United States. The greenback against a basket of currencies traded 0.1 percent up at 96.74, having touched a high of 96.82 on Monday, its highest since February 19. FxWirePro's Hourly Dollar Strength Index stood at 90.01 (Slightly Bullish) by 0500 GMT.
EUR/USD: The euro declined, as investors remained cautious ahead of a European Central Bank policy meeting on Thursday, where it is expected to signal a re-launch of its offer of long-term loans to banks. The European currency traded 0.1 percent down at 1.1329, having touched a high of 1.1419 on Thursday, its highest since Feb. 5. FxWirePro's Hourly Euro Strength Index stood at 50.21 (Bullish) by 0500 GMT. Investors’ attention will remain on a series of data from the Eurozone economies and EZ retail sales and Markit Service & Composite PMI's, ahead of the U.S. building permits, new home sales, monthly budget statement and non-manufacturing PMI from both Markit and ISM. Immediate resistance is located at 1.1371 (Feb. 20 High), a break above targets 1.1417 (Jan. 25 High). On the downside, support is seen at 1.1309 (Mar. 4 Low), a break below could drag it till 1.1289 (Feb. 18 Low).
USD/JPY: The dollar surged, hovering towards a 112.00 handle, boosted by a rise in U.S. Treasury yields as recent data, including U.S. fourth-quarter gross domestic product eased fears of a potentially rapid loss in economic momentum. The major was trading 0.2 percent up at 111.92, having hit a high of 112.07 on Friday, its highest since December 20. FxWirePro's Hourly Yen Strength Index stood at -51.73 (Bearish) by 0500 GMT. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. building permits, new home sales, monthly budget statement and non-manufacturing PMI from both Markit and ISM. Immediate resistance is located at 112.20, a break above targets 112.60 (Dec. 20 High). On the downside, support is seen at 111.31 (5-DMA), a break below could take it lower at 110.66 (Feb.28 Low).
GBP/USD: Sterling plunged, extending losses for the fourth straight session after data showed British consumers reined in their spending in February ahead of Brexit. Moreover, yesterday's soft data on Britain's construction industry and persisting Brexit uncertainty continued to weigh on the British pound. The major traded 0.1 percent down at 1.3161, having hit a high of 1.3350 on Wednesday; it’s highest since July 9. FxWirePro's Hourly Sterling Strength Index stood at -33.25 (Neutral) 0500 GMT. Investors’ attention will remain on developments surrounding Brexit deal, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.3240 (5-DMA), a break above could take it near 1.3362 (July 9 High). On the downside, support is seen at 1.3093 (Feb. 26 Low), a break below targets 1.3011 (Feb. 20 Low). Against the euro, the pound was trading 0.1 percent down at 86.07 pence, having hit a high of 85.28 on Wednesday, it’s highest since May 2017
AUD/USD: The Australian dollar slumped to a 3-week low after Caixin/Markit China purchasing managers' index showed the services sector eased to a 4-month low. However, the major found some support after the Reserve Bank of Australia stuck with its upbeat outlook for the economy despite a run of softer data recently. The Aussie trades 0.3 percent down at 0.7073, having hit a low of 0.7066 earlier; it’s lowest since February 12. FxWirePro's Hourly Aussie Strength Index stood at -25.44 (Neutral) by 0500 GMT. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate support is seen at 0.7060 (Feb.8 Low), a break below targets 0.7016 (Dec.26 Low). On the upside, resistance is located at 0.7150 (Feb. 22 High), a break above could take it near 0.7206 (Feb. 21 High).
NZD/USD: The New Zealand dollar tumbled to a 1-1/2 week low, as the market had second thoughts about the extent of progress being made in U.S.-China trade talks. The Kiwi trades 0.3 percent down at 0.6794, having touched a low of 0.6788 earlier, its lowest level Feb. 22. FxWirePro's Hourly Kiwi Strength Index was at -62.21 (Bearish) by 0500 GMT. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6853 (Feb. 22 High), a break above could take it near 0.6941 (Feb. 1 High). On the downside, support is seen at 0.6774 (Feb. 6 Low), a break below could drag it below 0.6719 (Feb. 12 Low).
Equities Recap
Asian shares plunged, undermined by downbeat Chinese service PMI and as China cut its economic expansion target amid growing challenges from rising debt and a trade dispute with the United States.
MSCI's broadest index of Asia-Pacific shares outside Japan slumped 0.5 percent.
Tokyo's Nikkei fell 0.5 percent to 21,711.89 points, Australia's S&P/ASX 200 index declined 0.3 percent to 6,199.30 points and South Korea's KOSPI eased 0.8 percent to 2,173.47 points.
Shanghai composite index rose 0.2 percent to 3,034.61 points, while CSI300 index traded 0.1 percent up at 3,789.90 points.
Hong Kong’s Hang Seng traded 0.05 percent lower at 28,954.58 points. Taiwan shares shed 0.4 percent to 10,305.26 points.
Commodities Recap
Crude oil prices declined as China cut its 2019 economic growth target, dimming the outlook for fuel demand, however, OPEC-led efforts to cut output limited downside. International benchmark Brent crude was trading 0.4 percent down at $65.31 per barrel by 0450 GMT, having hit a high of $67.11 on Friday, its highest since February 25. U.S. West Texas Intermediate was trading 0.3 percent lower at $56.25 a barrel, after rising as high as $57.85 on Friday, its highest since the November 16.
Gold prices consolidated near a 5-week low touched in the previous session, as rising U.S. Treasury yields boosted the bid tone around the greenback. Spot gold rose 0.2 percent to $1,288.83 per ounce by 0458 GMT, having touched a low of $1,282.74 in the previous session, its lowest since January 25. U.S. gold futures were also up 0.2 percent at $1,290.20 per ounce.
Treasuries Recap
The yield on Australia’s benchmark 10-year note slumped 3 basis points to 2.157 percent, the yield on the long-term 30-year bond plunged 3-1/2 basis points to trade at 2.716 percent and the yield on short-term 2-year traded nearly 2 basis points lower at 1.737 percent.
The New Zealand government bonds gained, nudging yields down around 2 basis points.
The Canadian government bond prices were higher across a flatter yield curve. The two-year rose 3.5 Canadian cents to yield 1.747 percent and the 10-year was up 32 Canadian cents to yield 1.90 percent.
