Market Roundup
• Trump fires top diplomat Tillerson, taps CIA's Pompeo.
• U.S. Feb Core CPI MM SA, 0.2%, 0.2% forecast, 0.3% previous.
• U.S. Feb Core CPI YY NSA, 1.8%, 1.8% forecast, 1.8% previous.
• U.S. Feb CPI Index NSA, 248.991, 248.936 forecast, 247.867 previous.
• U.S. Feb Core CPI Index SA, 255.75, 255.29 previous.
• U.S. Feb CPI MM SA, 0.2%, 0.2% forecast, 0.5% previous.
• U.S. Feb CPI YY NSA, 2.2%, 2.2% forecast, 2.1% previous,
• U.S. Feb NFIB Business Optimism Index, 107.60, 106.90 previous.
• U.S. Feb Real Weekly Earnings MM, 0.3%, 0.3% forecast, -0.8% previous.
• U.S. Redbook MM w/e, -0.3%, -0.5% previous.
• U.S. Redbook YY w/e, 2.9%, 3.8% previous.
• U.S. Feb Cleveland Fed CPI, 0.2%, 0.3% previous.
• UK set for years of slow growth but Hammond vows to do better.
• Britain's May gets EU support, cautious backing from Trump, in showdown with Russia.
• Bank of Canada: degree of untapped potential remains in economy.
• G20 financial leaders to speak against unfair trade practices -draft communique.
• Trade tensions cloud best global growth outlook in 7 years -OECD
Looking Ahead - Economic Data (GMT)
• 13 Mar 21:45 New Zealand Q4 Current Account - Qtrly NZD, -2.400 bln forecast, -4.679 bln previous
• 13 Mar 21:45 New Zealand Q4 Current Account- Annual NZD, -7.32 bln forecast, -7.10 bln previous
• 13 Mar 21:45 New Zealand Q4 Cact Balance To GDP, -2.6% forecast, -2.6% previous
• 13 Mar 23:30 Australia Mar Consumer Sentiment, -2.3% previous
• 13 Mar 23:50 Japan Jan Machinery Orders MM, 5.6% forecast, -11.9% previous
• 13 Mar 23:50 Japan Jan Machinery Orders YY, 0.6% forecast, -5.0% previous
• 14 Mar 02:00 China Feb Urban investment (ytd) yy, 7.0% forecast, 7.2% previous
• 14 Mar 02:00 China Feb Industrial Output YY, 6.1% forecast, 6.2% previous
• 14 Mar 02:00 China Feb Retail Sales YY, 9.8% forecast, 9.4% previous
Looking Ahead - Events, Other Releases (GMT)
• 13 Mar 23:50 BOJ releases the minutes of monetary policy meeting held on Jan 22-23 – Tokyo
• 14 Mar N/A ECB's Mario Draghi, Peter Praet, Vitor Constancio and Bank of France's Francois Villeroy de Galhau speak at the ECB and Its Watchers conference - Frankfurt
• 14 Mar 07:30 ECB's Benoit Coeure participates in an event with Fintech companies organised by FinLeap - Berlin
• 14 Mar 08:00 ECB's Mario Draghi speaks t "The ECB and Its Watchers XIX" conference organized by the Institute for Monetary and Financial Stability - Frankfurt
• 14 Mar 08:45 ECB's Ignazio Angeloni speaks at annual conference "Tapering e final QE: gli effete sugliasset in gestione" organised by Itinerari Previdenziali - Rome
• 14 Mar 08:45 ECB's Peter Praet participates in Debate 1 "Assessment of Quantitative Easing and Challenges of Policy
Normalization" at "The ECB and Its Watchers XIX" conference organised by the Institute for Monetary and Financial Stability - Frankfurt
• 14 Mar 10:45 ECB's Vitor Constancio participates in Debate 2 "The Pursuit of Financial Stability and Tasks for Monetary, Regulatory and Macro-Prudential Policies" at "The ECB and Its Watchers XIX" conference organised by the Institute for Monetary and Financial Stability - Frankfurt
• 14 Mar 16:15 ECB's Benoit Coeure participates in panel on 'Nullzinspolitik' at CDU-Wirtschaftsrat: Finanzmarktklausur - Berlin
Currency Summaries
EUR/USD is likely to find support at 1.2311 levels and currently trading at 1.2386 levels. The pair has made session high at 1.2408 and hit lows at 1.2326 levels. Euro edged higher against the dollar on Monday as greenback was pressured after U.S. inflation data for February came in line with expectations, suggesting the Federal Reserve remained on track to raise interest rates at a gradual pace.The dollar also lost traction after U.S. President Donald Trump fired Secretary of State Rex Tillerson and replaced him with Central Intelligence Agency Director Mike Pompeo, marking the biggest shakeup of the administration's Cabinet. U.S. consumer prices increased marginally in February amid a decline in gasoline prices and a moderation in the cost of rental accommodation, the latest indication that an anticipated pickup in inflation likely will be only gradual.U.S. President Donald Trump fired Tillerson after a series of public rifts over issues including North Korea and Russia. Steve Goldstein, a State Department undersecretary of state for public affairs, was also fired, soon after releasing a statement that Tillerson did not know why he was being pushed out. Trump has tapped CIA Director Mike Pompeo, seen as loyal to the president, to replace Tillerson.The influx of political news overshadowed earlier positive economic news earlier. The dollar index, which measures the greenback against a basket of currencies, fell 0.2 percent, with the euro up 0.48 percent to $1.2391.
GBP/USD is supported in the range of 1.3870 levels and currently trading at 1.3968 levels. It reached session high at 1.3995 and dropped to session low at 1.3878 levels. Sterling rose to a two-week high on Tuesday as the dollar sold off after data showed U.S. consumer price inflation in February cooled and President Donald Trump said he had fired U.S. Secretary of State Rex Tillerson. British Finance Minister Philip Hammond gave his half-yearly economic update on the economy. Hammond upgraded his growth forecasts a little and trimmed his budget deficit expectations, providing some extra wind behind sterling's bounce higher. Hammond said Britain's budget forecasters expect the economy to grow by 1.5 percent in 2018, up from a forecast of 1.4 percent in November. That would help the government lower its expected borrowing in the run-up to Brexit, he said. The pound rose half a percent to a day's high of $1.3984, its best level since Feb. 27, before falling back slightly to trade at $1.3968.Against the euro, sterling gained as much as 0.2 percent to 88.52 pence per euro before the euro recovered. With Britain stuck in negotiations with the European Union to try to agree on the terms of a transition deal to cover the period after it leaves the bloc, Brexit had been overshadowing other influences on the pound. After the pound performed well in January, renewed concerns about the state of Brexit talks after the EU rejected some British proposals for a trade deal last week had weighed on sterling in recent weeks.
USD/CAD is supported at 1.2826 levels and is trading at 1.2970 . It has made session high at 1.2946 and lows at 1.2826 levels. The Canadian dollar weakened against the greenback on Tuesday after Bank of Canada Governor Stephen Poloz said that the country’s economy could grow without spurring inflation, though investor positioning was seen as exaggerating the move.Poloz said that there remains a degree of untapped potential in the Canadian economy, particularly in the labor market, with youth, women and indigenous people representing untapped sources of potential economic growth. While, the dollar slipped against a basket of currencies on the inflation data. The greenback was also hurt by President Donald Trump's firing of Secretary of State Rex Tillerson after a series of public rifts over policy on North Korea, Russia and Iran.U.S. crude fell 1.35 percent to $60.53 per barrel and Brent was last at $64.40, down 0.85 percent on the day. The greenback was up 0.79 percent against the Canadian dollar at C$1.2937. The currency traded in a range of C$1.2828 to C$1.2983.
USD/JPY is supported around 106.22 levels and currently trading at 106.55 levels. It peaked to hit session high at 107.26 and made session lows at 106.45 levels. The U.S. dollar weakened against the yen on Tuesday as investors sold dollar after U.S. President Donald Trump's ousted Secretary of State Rex Tillerson. Also weighing on the dollar was news that U.S. consumer prices cooled in February, the latest indication that an expected pick-up in inflation is likely to be only gradual. Some investors had been worried stronger-than-expected CPI data could stoke expectations that the U.S. Federal Reserve will raise interest rates four times rather than three this year.The Labor Department reported that its Consumer Price Index rose 0.2 percent last month, in line with expectations, but had slowed compared with its 0.5 percent jump in January. January's surge in inflation cemented investors' expectation of an interest rate hike in March and increased the possibility of a fourth hike in 2018. Although February's data was in line with expectations, it reduced the possibility of a fourth rate hike this year, with Fed funds futures data showing investor expectations fell from 28 percent before the release to 25 percent following it. Markets are now looking to the next Fed meeting for direction on the pace of U.S. interest rate hikes this year.
Equities Recap
European shares closed firmly in negative territory on Tuesday as the euro rose against a faltering dollar after U.S. President Donald Trump fired Secretary of State Rex Tillerson.
UK's benchmark FTSE 100 closed down by 1.1 percent, the pan-European FTSEurofirst 300 ended the day down by 1.09 percent, Germany's Dax ended down by 1.8 percent, France’s CAC finished the day down 0.9 percent.
Wall Street's major indexes fell on Tuesday as the dismissal of Secretary of State Rex Tillerson and the possibility of additional tariffs dragged down stocks across sectors.
Dow Jones closed down by 0.69 percent, S&P 500 ended down by 0.64 percent, Nasdaq finished the day down by 1.02 percent.
Treasuries Recap
The U.S. yield curve flattened on Tuesday as longer-dated bonds fell on strong demand for 30-year securities at auction, and on earlier news that February consumer price data cooled, suggesting the anticipated pickup in inflation is likely to be gradual.
The 30-year bond yield was last trading at 3.099 percent, down 3 basis points from Monday's close. The yield on the benchmark 10-year Treasury note was 2.844 percent, down from 2.870 percent at last close. The five-year note, was down 1 basis point to 2.625 percent.
Commodities Recap
Gold prices turned positive on Tuesday as the U.S. dollar lost ground after news that U.S. President Donald Trump replaced Secretary of State Rex Tillerson, while U.S. inflation data was in line with forecasts.
Spot gold was up 0.3 percent at $1,326.49 an ounce by 1:42 p.m. EDT (1742 GMT), while U.S. gold futures for April delivery settled up 0.5 percent at $1,327.10.
Oil fell more than 1 percent on concerns over rising U.S. production and as equities fell, erasing earlier gains driven in part by the firing of U.S. Secretary of State Rex Tillerson.
Brent crude futures dropped 31 cents, or 0.5 percent, to settle at $64.64 per barrel. U.S. West Texas (WTI) crude futures fell 65 cents, or 1.06 percent, to $60.71 per barrel.
