Market Round Up
- Dollar index 11-year high at 95.730.
- Euro struggles ahead of ECB polic meet Thurs, EUR/USD 1.1115 fm 1.11855.
- Sterling edges lower after UK services PMI.
- EUR/SEK extends to 3 month low at 9.2080.
- EU court says annuls ECB decision that euro clearing houses must be based in EZ.
- Spain EconMin: EU will use next 4mths 'to see what's next, that is a 3rd rescue' for Greece.
- China's rating agency Dagong cut France's ratings from A+ to A.
- EZ Feb Markit Services final PMI 53.7 vs prev 53.9. 53.9 expected.
- EZ Feb Markit Composite final PMI 53.3 vs previous 53.5. 53.5 expected.
- GB Markit/CIPS Serv PMI 56.7 vs previous 57.2. 57.5 expected.
- Aus Q4 GDP +0.5% q/q, +2.5% y/y, as expected.
- China Feb HSBC service PMI rises to 52.0 from 51.8 in Jan
- (0815 ET/1315 GMT) ADP issues the National Employment Report for February. Economists forecast a gain of 220,000 jobs versus previous 213,000.
- (0945 ET/1445 GMT) The financial data firm Markit releases the final reading of its Purchasing Managers Index for the service sector for February. Markit Composite Final PMI for Feb, previous 56.8; Services PMI Final for Feb, previous 57.0.
- (1000 ET/1500 GMT) The Institute for Supply Management releases its non-manufacturing index for February. Analysts expect a reading of 56.5.
- ISM Non-Manufacturing Business Activity for Feb, market expectation 61.0, previous 61.5.
- ISM N-Manufacturing Employment Index for Feb, previous 51.6.
- ISM N-Manufacturing New Orders Index for Feb, previous 59.5.
- ISM N-Manufacturing Price Paid Index for Feb, previous 45.5.
- (1000/1500) The Bank of Canada will announce its interest rate decision and give its analysis of the economy. The central bank is expected to follow January's surprise rate cut by holding rates at 0.75 percent. Analysts believe recent comments from Governor Stephen Poloz suggest the bank will wait to see how the recent oil price slump plays out in the economy. Still, the Bank of Canada is expected to cut rates once more by the second half of the year.
- 14:00 FRB Chicago's Evans (voter, dove) on current economic conditions/monetary policy.
- 14:00 FRB New York's Dudley (voter, dove) on student loans.
- 15:45 FedTrade operation 15-year Fannie Mae / Freddie Mac (max $525 mln).
- 18:00 Buba Thiele speech in Berlin.
- 18:00 FRB Kansas City's George (non-voter, hawk) on the U.S. economy.
- 19:00 Fed releases Beige Book.
- 00:00 FRB Dallas President Fisher (non-voter, hawk) in farewell address.
EUR/USD dropped to 1.1115 a day ahead of the ECB meeting. The main mover said to be the EU court's ruling that the ECB is wrong to say that euro clearing houses must be based in the euro area. With most European clearing houses based in London, EUR/GBP sold off sharply as Italy and German services PMIs disappointed. China's rating agency Dagong also cut France's ratings from A+ to A. Real money selling of euros was tipped ahead of any news though with further US/EZ rate divergence fuelling sales. Bids now seen ahead 1.1100 but a high chance now of a 1.1000 test on the right payrolls data.
USD/JPY- 119.83/119.50 range set in Asia. Semi official name offers touted above 120.00. Yesterday's high 120.27, Mon's peak 120.19. Double top mid Feb 120.48. USD 5bln Option expiries 120.00 for Thurs/Friday. Implied vols lows since Oct. Macro bids seen at day's lows. Stops touted around yesterdays 119.38 base, with tech support 119.29 Tenkan-sen and 21dma 119.05. NFP next focus Friday.
GBP/USD fell to a 2 week low a couple of pips shy of 1.5324 after the 4.30am ET disclosure of Feb's sub-f/c UK service sector PMI. 1.5324 is 38.2% of 1.4952 (Jan 23 low) to 1.5554 (Feb 26 high). 1.5340-1.5369 was the early Europe range. EUR/GBP fell from an early Europe high of 0.7280 to threaten 0.7235 (Monday's 7yr+ low) ahead of the UK service PMI miss, with profit-taking on shorts fuelling the subsequent climb to 0.75635.
EUR/CHF trades 1.0704 from 1.07505 weighed down by euro weakness in the London AM. Supported ahead of the figure and tight ranges look set to prevail into the ECB meet Thursday. USD/CHF made a minor new recovery high at 0.9635 from 0.9625 Tuesday. The upper 21 DMA Bollinger is guiding the pace of rise, at 0.9666 last. 0.9602 is the session low.
USD/CAD rose to a European am high of 1.2534 ahead of the 10am ET BoC rate announcement. No change is the consensus expectation (the CAD was hit hard by the unexpected BoC rate cut on Jan 21). 1.2481-1.2507 was today's Asian session range. WTI oil $50.70/barrel at 6.10am ET, 20 cents higher on the day.
AUD/USD held below 0.7850 through the European am, with 0.7838 marking the traded high (0.7845 was Tuesday's high). There is a large 0.7850 option expiry for Thursday's NY cut, to follow a small 0.7850 expiry today. Stops are tipped above 0.7850/55. Australian regulators have approved a bid by the US arm of Brazilian firm JBS to acquire Primo. The size of the deal is mooted at A $1.45bn.
NZD/USD rose by nearly half-a-cent from an early Europe low of 0.7545 to threaten 0.7600 (Monday's early Asia high, after PBOC's weekend rate cut). 0.7573 (Tuesday's high) is now a support point. The RBNZ meets next week, with the OCR expected to be held at 3.5%. AUD/NZD eased to a European am low of 1.0324, a quarter-cent above last month's multi-year low (1.0405 = Tuesday's post-RBA rate verdict high).
