Market Roundup
- Oil bounces from multi-year lows as hopes of OPEC+ cut, stimulus
- Gold rises on recession fears
- Markets bet Fed will cut rates this month
Economic Data Ahead
- (0315 ET/0815 GMT) Spain Markit Manufacturing PMI (Feb)
- (0330 ET/0830 GMT) Switzerland SVME - Purchasing Managers' Index (Feb)
- (0345 ET/0845 GMT) Italy Markit Manufacturing PMI (Feb)
- (0350 ET/0850 GMT) France Markit Manufacturing PMI (Feb)
- (0355 ET/0855 GMT) Germany Markit Manufacturing PMI (Feb)
- (0400 ET/0900 GMT) EZ Markit Manufacturing PMI (Feb)
- (0430 ET/0930 GMT) UK Markit Manufacturing PMI (Feb)
- (0430 ET/0930 GMT) UK Net Lending to Individuals (MoM) (Jan)
- (0430 ET/0930 GMT) UK Consumer Credit (Jan)
- (0430 ET/0930 GMT) UK M4 Money Supply (MoM) (Jan)
- (0430 ET/0930 GMT) UK M4 Money Supply (YoY) (Jan)
- (0430 ET/0930 GMT) UK Mortgage Approvals (Jan)
Key Events Ahead
- No significant event scheduled
FX Beat
DXY: The dollar index slumped to a 1-month low as traders raised their bets of an interest rate cut by the U.S. Federal Reserve this month to shield the economy from the rapid spread of the coronavirus. The greenback against a basket of currencies traded 0.3 percent down at 97.88, having touched a low of 97.85 earlier, its lowest since Feb. 4.
EUR/USD: The euro surged to a 1-week peak as the greenback eased on bets of an interest rate cut by the U.S. Federal Reserve this month. The European currency traded 0.2 percent up at 1.1045, having touched a high of 1.1073 earlier, its highest since Feb. 3. Investors’ attention will remain on a series of data from the Eurozone economies and EZ Markit manufacturing PMI, ahead of the U.S. construction spending and manufacturing PMI by both Markit and ISM. Immediate resistance is located at 1.1094, a break above targets 1.1118. On the downside, support is seen at 1.1019, a break below could drag it below 1.0992.
USD/JPY: The dollar rebounded after tumbling to a near 5-month low earlier in the session on growing expectations that the U.S. Federal Reserve will cut interest rates at its policy review this month to protect the economy from the rapid spread of the coronavirus. The major was trading 0.2 percent up at 108.30, having hit a low of 107.36 earlier, its lowest since October 10. Investors’ will continue to track the broad-based market sentiment, ahead of the U.S. construction spending and manufacturing PMI by both Markit and ISM. Immediate resistance is located at 108.62, a break above targets 108.99. On the downside, support is seen at 107.03, a break below could take it near at 106.80.
GBP/USD: Sterling nudged higher after plunging to a 4-1/2 week low in the prior session on worries about the fast-spreading coronavirus. Investors also remain concerned about Britain’s negotiations with the European Union over a trade deal and whether a UK budget next month will include much more spending. The major traded 0.2 percent up at 1.2842, having hit a low of 1.2725 on Friday, it’s lowest since Oct. 16. Investors’ attention will remain on the trade negotiations, ahead of the U.S. fundamental drivers. Immediate resistance is located at 1.2872, a break above could take it near 1.2928 (10-DMA). On the downside, support is seen at 1.2748, a break below targets 1.2701. Against the euro, the pound was trading 0.2 percent down at 86.18 pence, having hit a low of 86.50 earlier, it’s lowest since Nov. 7.
AUD/USD: The Australian dollar steadied near an 11-year low as a soft reading on Chinese manufacturing and talk of rate cuts in the United States stoked speculation of an imminent Reserve Bank of Australia policy easing. A survey released over the weekend showed factory activity in China contracted at the fastest pace ever in February, while a hint from the Federal Reserve that it may take action, fuelled speculation the RBA would respond by cutting interest rates at its monthly policy meeting on Tuesday. The Aussie trades 0.4 percent up at 0.6522, having hit a low of 0.6433 on Friday, it’s lowest since March 2009. Investors will continue to track overall market sentiment, ahead of U.S. economic releases. Immediate resistance is located at 0.6554 (50% retracement of 0.6750 and 0.6433), a break above could take it near 0.6582 (61.8% retracement). On the downside, support is seen at 0.6448, a break below targets 0.6424.
NZD/USD: The New Zealand dollar consolidated near 5-year lows as investors wager the Reserve Bank of New Zealand would be forced into cutting interest rates, even though it recently dropped its easing bias and turned neutral. The Kiwi trades 0.1 percent down at 0.6240, having touched a low of 0.6191 on Friday, its lowest level since August 2015. Investors’ will continue to track broad-based market sentiment, ahead of U.S. economic data. Immediate resistance is located at 0.6259 (23.6% retracement of 0.6487 and 0.6191), a break above could take it near 0.6303 (38.2% retracement). On the downside, support is seen at 0.6172, a break below could drag it below 0.6156.
Equities Recap
Asian shares rebounded on hopes global central bank would take necessary steps to stabilise financial markets.
MSCI's broadest index of Asia-Pacific shares outside Japan rallied 0.4 percent.
Tokyo's Nikkei gained 0.9 percent to 21,355.08 points, Australia's S&P/ASX 200 index slumped 0.8 percent to 6,391.50 points and South Korea's KOSPI surged 0.8 percent to 2,002.51 points.
Shanghai composite index rose 3.2 percent to 2,970.93 points, while CSI 300 index traded 3.4 percent up at 4,069.67 points.
Hong Kong’s Hang Seng traded 0.6 percent higher at 26,277.73 points. Taiwan shares shed 1.1 percent to 11,170.46 points
Commodities Recap
Crude oil prices rebounded more than $1 a barrel after hitting multi-year lows earlier in the prior session as hopes of a deeper cut in output by OPEC and stimulus from central banks countered worries about damage to demand from the coronavirus outbreak. International benchmark Brent crude was trading 2.4 percent higher at $51.23 per barrel by 0641 GMT, having hit a low of $48.92 on Friday, its lowest since July 2017. U.S. West Texas Intermediate was trading 1.5 percent up at $45.95 a barrel, after falling as low as $43.88 on Friday, its lowest since Dec. 2018.
Gold prices surged more than 1 percent as worries that the coronavirus epidemic could push the global economy into recession sent investors seeking safety into safe haven assets. Spot gold gained 1.01 percent to $1,602.20 per ounce by 0655 GMT, having touched a low of $1563.03 on Friday, its lowest since Feb. 12. U.S. gold futures rose 1.9 percent to $1,597.10.
Treasuries Recap
The Australian bond yields duly to all-time lows with the 10-year down at 0.84 percent. The 3-year bond future surged 16.5 ticks on Monday to a record peak of 99.665, implying an yield of just 0.335 percent. The 10-year contract climbed 13 ticks to 99.3150.
