Market Roundup
- Market opens risk-off as impending FOMC decision and Dutch vote limits investor appetite
- UK parliament passes bill to launch Article 50, March 27 seen as probable date
- France Fillon's presidential campaign re-launch marred by gifts of luxury suits
- ECB won't hike rates before QE ends
- Brent crude holds around $51 ahead of inventory data
- Shanghai Composite gains 0.05% on above forecast data
- German February CPI Final 0.6% m/m (expected 0.6%, previous 0.6%) and 2.2% y/y (expected 2.2%, previous 2.2%)
- German February HICP Final 0.7% m/m (expected 0.7%, previous 0.7%) and 2.2% y/y (expected 2.2%, previous 2.2%)
- Spain February CPI -0.4% m/m (expected -0.3%, previous -0.5%) and 3.0% y/y (expected 3.0%, previous 3.0%)
- Spain February HICP -0.3% m/m (expected -0.3%, previous -1.0%) and 3.0% y/y (expected 3.0%, previous 3.0%)
- German March ZEW Economic Sentiment 12.8 (expected 13.1, previous 10.4)
- German March ZEW Current Conditions 77.3 (expected 78.0, previous 76.4)
- Eurozone January Industrial Production 0.9% m/m (expected 1.3%, previous -1.2%) and 0.6% y/y (expected 0.9%, previous 2.5%)
Economic Data Ahead
- (0730 ET/1230 GMT) The U.S. producer price index is likely to have increased 0.1 percent in February, while in the 12 months through the same period, it is expected to have advanced 2.0 percent. PPI excluding food and energy probably edged up 0.2 percent after rising 0.4 percent in January.
- (0900 ET/1400 GMT) Mexico will release its industrial output data for the month of January. The economy's industrial production is expected to fall 0.2 percent, against a 0.6 percent decline in December.
- (0930 ET/1430 GMT) The Conference Board releases Britain's Leading Economic Index for the month of February. The index remained unchanged in the prior month.
- (1000 ET/1500 GMT) The Fed releases its labor market conditions index (LMCI) for the month of February. The indicator posted a rise of 1.3 in the previous month.
- (1530 ET/2030 GMT) API reports its weekly crude oil stock.
- (1645 ET/2145 GMT) The Statistics New Zealand releases current account data for the fourth quarter. The economy's deficit is likely to have narrowed to $2.543 billion from $4.890 billion in the previous quarter.
Key Events Ahead
- (0645 ET/1145 GMT) FedTrade 30-year Fannie Mae / Freddie Mac (max $1.15 bn)
- (0800 ET/1300 GMT) The U.S. Federal Open Market Committee begins a two-day meeting on interest rate policy.
FX Beat
DXY: The dollar rallied across the board on the back of higher U.S. treasury yields, while investors awaited the commencement of a two-day U.S. Federal Reserve meeting. The greenback against a basket of currencies traded 0.2 percent up at 101.60, recovering from a low of 101.01 hit on Monday, its lowest since Feb. 28. FxWirePro's Hourly Dollar Strength Index stood at 29.13 (Neutral) by 1000 GMT.
EUR/USD: The euro slumped, retreating from a 1-month peak hit in the previous session, as investors turned cautious ahead of FOMC meeting outcome on Wednesday. Moreover, the selling pressure around the major intensified after data showed Eurozone's industrial production slowed in the month of January. The European currency traded 0.1 percent lower at 1.0638, having hit a high of 1.0714 on Monday, its highest since Feb. 7. FxWirePro's Hourly Euro Strength Index stood at 46.19 (Neutral) by 1000 GMT. Any close above 1.0700 will take the pair till 1.07400/1.0800/1.0828. It should break above 1.0873 for further bullishness. On the lower side, any weakness can be seen below 1.0490 and break below will drag it till 1.0453/1.0345 (Jan 1st low).
USD/JPY: The dollar rose above the 115.00 handle, strengthened by higher U.S. treasury yields, however, cautious sentiment around equity markets limited the upside. Investors now await the FOMC and BOJ policy meeting scheduled later this week, where the Fed is widely expected to hike rates by 25 bps on Wednesday, while the BoJ is likely to stand pat on Thursday. The major traded 0.15 percent up at 115.06, having hit a high of 115.50 on Friday, its highest since Jan. 19. FxWirePro's Hourly Yen Strength Index stood at -57.30 (Bearish) by 1000 GMT. Any close above 115 confirms minor bullishness, a jump till 115.94 is likely. On the lower side, minor support is around 114.50 (23.6% retracement of 111.59 and 115.50) and any break below targets 113.89/113.
GBP/USD: Sterling tumbled to an 8-week low as investors worried over a second Scottish independence referendum and the triggering of formal Brexit negotiations. On Monday, Britain's parliament passed the Brexit bill, allowing Prime Minister Theresa May to trigger Article 50 and formally begin the process of separation with the European Union. Sterling trades 0.7 percent lower at 1.2132, having hit a low of 1.2109 earlier, its weakest since Jan. 17. FxWirePro's Hourly Sterling Strength Index stood at -138.51 (Highly Bearish) by 1000 GMT. On the higher side, any break above 1.2250 will take the pair to next level 1.2300/1.2345. The next immediate support stands at 1.2130 and any break below will drag it down till 1.2080/1.2030. Against the euro, the pound trades 0.6 percent down at 87.73 pence, hovering towards an 8-week low of 87.87 the prior session.
USD/CHF: The Swiss franc retreated from a 2-week high as the greenback strengthened ahead of Federal Reserve monetary policy decision announcement on Wednesday. The major traded 0.1 percent higher at 1.0084, having hit a low of 1.0060 the day before, its weakest since Mar. 1. FxWirePro's Hourly Swiss Franc Strength Index stood at 65.28 (Bullish) by 1000 GMT. The pair should break above the weekly high of 1.01700 for further jump till 1.0200/1.02480. On the lower side, 1.0060 will be acting as immediate support and any break below will drag the pair down till 1.000/0.9960 (Feb 16 high).
AUD/USD: The Australian dollar eased, reversing some of its previous session gains as downbeat domestic business conditions report and mixed Chinese economic data weighed on market sentiment. Moreover, positive sentiments around the U.S. Treasury bond yields lend support to the greenback, further weakening the bid tone surrounding the Aussie. The major trades 0.1 percent down at 0.7558, having touched a high of 0.7592 on Monday, it’s highest since Mar. 8. FxWirePro's Hourly Aussie Strength Index stood at 92.99 (Slightly Bullish) by 1000 GMT. On the lower side, the next immediate support stands at 0.7490 and any break below will drag the pair down till 0.74450/0.7380 (61.8% retracement of 0.71599 and 0.77406). The major resistance is around 0.7598 (21- day EMA) and a break above will take it till 0.7635/0.7680.
Equities Recap
European shares declined in early trade as investors remained cautious ahead of elections in the Netherlands and Federal Reserve interest rate decision on Wednesday.
The pan-European STOXX 600 index tumbled 0.25 percent to 373.71 points, while the FTSEurofirst 300 index declined 0.24 percent to 1,473.46 points.
Britain's FTSE 100 trades 0.15 percent up at 7,377.89 points, while mid-cap FTSE 250 added 0.05 percent to 19,039.18 points.
Germany's DAX edged down 0.07 percent at 11,981.43 points; France's CAC 40 trades 0.31 percent lower at 4,984.02 points.
Tokyo's Nikkei dropped 0.12 percent to 19,609.50 points, Australia's S&P/ASX 200 index fell 0.05 percent to 5,754.20 points and South Korea's KOSPI gained 0.79 percent to 2,133.78 points.
Shanghai composite index rose 0.1 percent to 3,239.33 points, while CSI300 index eased 0.04 percent to 3,456.69 points. Hong Kong’s Hang Seng shed 0.01 percent to 23,827.95 points.
Commodities Recap
Crude oil prices steadied, after falling to near three-month lows in the previous month, while investors awaited key reports and data for further insights on a supply overhang. International benchmark Brent crude was trading 0.2 percent up at $51.53 per barrel by 0928 GMT, having hit a low of $50.88 in the previous session, its lowest since Nov. 30. U.S. West Texas Intermediate crude gained 0.2 percent at $48.54 a barrel, after falling to a trough of $47.94 on Monday, its weakest since Nov end.
Gold prices eased, extending previous session losses as investors awaited for the commencement of a two-day U.S. Federal Reserve meeting where the central bank is widely expected to hike interest rates. Spot gold was trading lower at $1,203.48 per ounce at 0944 GMT, having tumbled to $1,194.86 on Friday, its weakest since Jan. 31. U.S. gold futures stood at $1,202.8.
Treasuries Recap
The U.S. Treasuries slipped ahead of the FOMC’s monetary policy meeting, scheduled to be held on March 15-16. The yield on the benchmark 10-year Treasury rose 1-1/2 basis points to 2.56 percent, the super-long 30-year bond yield jumped nearly 2-1/2 basis points to 3.15 percent and the yield on short-term 2-year note traded 1 basis point lower at 1.35 percent.
The UK gilts slumped ahead of the country’s labor market report, due on March 15 and as investors remain cautious ahead of the Bank of England’s (BoE) monetary policy decision, scheduled to be held on March 16. The yield on the benchmark 10-year gilts, rose 1 basis points to 1.25 percent, the super-long 25-year bond yields also rose 1/2 basis point to 1.88 percent and the yield on the short-term 3-year traded flat at 0.24 percent.
The German bunds dived Tuesday as investors remain keen to watch the 30-year auction, scheduled to be held on March 15 which will remain crucial in determining the future direction of the bond market. The yield on the benchmark 10-year bond, which moves inversely to its price, jumped nearly 1-1/2 basis points to 0.48 percent, the long-term 30-year bond yields rose nearly 1 basis point to 1.24 percent and the yield on short-term 3-year bond also traded nearly 1 basis point higher at -0.66 percent.
The Japanese government bonds traded narrowly mixed Tuesday as investors await to watch the Bank of Japan’s (BoJ) 2-day monetary policy meeting, scheduled to be held on March 15-16, announcing its decision on Thursday. The benchmark 10-year bond yield, which moves inversely to its price, hovered around 0.09 percent, the long-term 30-year bond yields also traded flat at 0.87 percent and the yield on the short-term 2-year note remained steady at -0.25 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.
The Australian bonds rallied followed by weak business conditions across sectors that lent demand towards safe-haven buying. However, expectations of an upbeat employment report, scheduled to be released on March 15, offset further gains in the debt market. 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.
