Market Roundup
- BoJ leaves policy unchanged, vote 8-1, Kiuchi disagrees again.
- BoJ's Kuroda: Japan economy continues to recover moderately as a trend; consumer inflation likely to be around 0 percent for the time being; can't exclude a decline in CPI due to falling oil prices; see no problem with liquidity in JGB market.
- Japan FinMin: A year or two not enough to change deflationary mindset.
- Moody's: Germany's susceptibility to geopolitical event risk is very low; lower oil prices and a weaker euro will support Germany's already robust economic growth this year.
- Sweden FinMin Andersson: Must support investment to boost inflation; strong SEK makes it harder to push up consumer prices.
- Germany Mar ZEW Economic Sentiment 54.8 vs 58.2 exp, 53.0 previous.
- Germany Mar ZEW Current Condition 55.1 vs 50.0 exp, 45.5 previous.
- Euro Zone Q4 Employment 0.9% y/y vs 0.6% previous.
- Euro Zone final Feb inflation -0.3% y/y vs -0.3% exp, -0.3% previous.
Economic Data Ahead
- (0830 EDT/1230 GMT) Canada Jan Mfg Sales consensus -1.2%, +1.7% previous
- (0830 EDT/1230 GMT) US Hse Starts Feb consensus 1.049m, previous 1.065m
- (0830 EDT/1230 GMT) US Building Permits Feb consensus 1.065m, previous 1.060m
- (0855 EDT/1255 GMT) US Redbook Weekly Same Store Sales Index previous +2.6% y/y
Key Events Ahead
- (1000 EDT/1400 GMT) Treasury Sec'y Lew testifies Hse Commitee on Financial Services
- (1145 EDT/1545 GMT) FedTrade 30year F.Mae/Fr.Mac max $1.875 bln
- (1300 EDT/1700 GMT) FOMC begins two-day meeting
- (1430 EDT/1830 GMT) FedTrade 15year F.Mae/Fr. Mac max $575 mln
FX Recap
EUR/USD hit the 1.06 levels briefly as it saw fresh buying interest owing to the surge in the German bond yields. However, it quickly reverted and currently trades at 1.0577 levels. To the upside, resistance is seen at 1.0618 levels and above which it could be pushed to 1.0654 levels. On the other hand, support is seen at 1.0550 levels. Option expiries at 1.0725 (428M).
USD/JPY is consolidating between 120.60 and 122.02 for the past four trading sessions. Short term trend is bullish as long as support 120.48 holds. On the downside minor support is around 121 and any break below will target 120.50 /119.90. The pair's minor resistance is around 122.20 and above that level it will reach 123/124.13. Option expiries at 121.00 (930M), 121.25-30 (750M), 121.75 (700M), 122.00 (612M).
AUD/USD remained largely subdued in the absence of any significant economic releases and as markets await FOMC meeting minutes scheduled for release tomorrow. It currently trades at 0.6540 levels. Overall trend remains bearish and pair sees resistance at 0.77, 0.7850 and 0.8200 levels. On the downside, support is seen at 0.7610 levels and then at 0.7550 levels.
USD/CHF trimmed gains and traded in the red on Tuesday at 1.0029 levels driven by a weak US dollar across board. On the topside, immediate resistance is seen at 1.0100 levels and above which gains could be extended to 1.0131 levels. On the flipside, next support is seen at 1.00 levels and then at 0.9966 levels.
GBP/USD fell to 1.4771 levels and is trying to sustain itself above 1.48 handle. The weakness in the pair may have been triggered by buying in the EUR/GBP. Next support level is seen at 1.4746, below which the pair could extend losses to 1.4698 levels. On the flipside, a break above 1.48 levels could see the pair re-test 1.4844 levels. Option expiries at 1.4800 (125M), 1.4900 (175M). EUR/GBP continued its corrective move and is trading at 0.7165 levels. It is likely to rise up to 0.7200 levels.
