Market Roundup
- BOJ leaves policy as is, Y80 trln base money target, IOER -0.1%, to review ratio of reserves applied to NIRP every 3-mos, to exempt money reserve funds from NIRP, removes language to cut rates again if needed but to maintain option of easing in three dimentions – quantity (more QQE), quality and rates. If needed, economy still recovering, pause in exports, output flat, inflation expectations rising long-term, Fed policy-EM-volatile markets risks.
- Japan Economic Minister Ishihara – Need to continually monitor FX and market moves, “rough” since start of year, BoJ NIRP effect on economy.
- China said to draft rules for Tobin tax on currency transactions.
- RBA March 1 meeting minutes – Low inflation to provide scope for more easing if needed, reasonable prospects for continued growth, OCR good as is at accommodative setting, low rates-AUD fall helping economy re-balance.
- Australia February new motor vehicle sales -0.2% m/m, Jan +0.5%.
Economic Data Ahead
- (0345 ET/0745 GMT) France February HICP – final, +0.3% m/m, -0.1% y/y eyed; flash -1.1%, +0.3%.
- (0430 ET/0830 GMT) Sweden February CPI, +0.3% m/m, +0.4% y/y eyed; last -0.3%, +0.8%.
- (0430 ET/0830 GMT) Sweden CPIF, +0.3% m/m, +1.1% y/y eyed; last -0.4%, +1.6%.
- (0500 ET/0900 GMT) Italy February CPI - final, -0.2% m/m, -0.3% y/y eyed; flash -0.2%, -0.3%.
- (0500 ET/0900 GMT) Italy February HICP – final, -0.4% m/m, -0.2% y/y eyed; flash -0.4%, -0.2%.
- (0600 ET/1000 GMT) Euro Zone Q4 employment; last +0.3% q/q, +1.1% y/y.
- (0830 ET/1230 GMT) US February retail sales/ex-autos, both -0.2% m/m eyed; last +0.2%, +0.1%.
- (0830 ET/1230 GMT) US March NY Fed Empire State manufacturing index, -10.0 eyed; last -16.64.
- (0830 ET/1230 GMT) US Feb PPI, -0.2% m/m, +0.1% y/y eyed; last +0.1%, -0.2%.
- (0830 ET/1230 GMT) US Feb – ex-food/energy, +0.1% m/m, +1.1% y/y eyed; last +0.4%, +0.6%.
- (1000 ET/1400 GMT) US January business inventories, unchanged m/m eyed; last +0.1%.
- (1000 ET/1400 GMT) US March NAHB housing market index, 59.0 eyed; last 58.0.
Key Events Ahead
- (0230 ET/0630 GMT) BoJ Gov Kuroda press conference.
- N/A Riksbank Gov Ingves speaks at Stockholm event.
- N/A Spain 3/9-month treasury bill auctions.
- (0530 ET/0930 GMT) ECB zero% 7-day refinance, E60 bln allotment eyed, E60.8 bln maturing.
- N/A FOMC begins two-day meeting.
- (1430 ET/1830 GMT) BoE Fisher at Canary Wharf event.
- (1600 ET/2000 GMT) US Tsy int’l capital flows data (TIC report), last $114 bln net outflow.
FX Recap
USD: The dollar was nearly flat against its Japanese counterpart at 113.78 yen. The dollar was steady against a basket of currencies, with the dollar index at 96.612, holding well above a one-month low of 95.938 hit on Friday.
EUR/USD: Pair fails to sustain above $1.12 marks and currently trading around 1.1105 levels. Short term bias remains bearish till the time pair holds key resistance level at $1.1218. On the down side, key support level is seen at $1.1050 marks. A daily close above key resistance will drag the parity towards $1.1376 marks. Looking ahead, Euro zone employment is the only feature in European session.
USD/JPY: As was widely anticipated the Bank of Japan made no changes to its already very loose monetary policy stance on Tuesday. The BOJ was widely expected to stand pat on monetary policy after adopting negative rates in January. Pair is likely to consolidate below 114.87 levels. A daily close above 114.87 is required to confirm the bullish trend. On the other side, key support level is seen at 112.60 levels. A daily close below key support level at 110.98 will drag the parity towards 108.75/107.51 marks thereafter. On the top side, key resistance levels are seen at 114.87/115.96 levels.
GBP/USD: The pair breaks key resistance at $1.4378 levels but fails to sustain above $1.44 levels. Pair is currently trading around $1.4263 levels. Short term bias remains bearish till the time pair holds key resistance at $1.4436 level. On the down side key support falls at $1.3835 level. Alternatively, a daily close above $1.4378 will take the parity towards key resistance at $1.4508.
AUD/USD: Aussie falls against major peers after the RBA’s March monetary policy meeting minutes. RBA noted in the minutes that "Continued low inflation would provide scope to ease policy further, should that be appropriate to lend support to demand." and "there appeared to be more uncertainty about the direction and potency of monetary policy in the major jurisdictions". Pair fails to sustain above 0.75 and currently trading around 0.7486 levels. A sustained close above $0.7593 levels will drag the parity towards 0.7653 area. On the downside, a break below $0.7365 support levels will turn bias back to the downside for retesting 0.6826 low.
NZD/USD: The New Zealand dollar edged down to $0.6644 on Tuesday. Pair remains well supported below $0.67 marks and made high at $0.6684 levels. Key support was found at $0.6633, with resistance at $0.6717 levels.
Equities Recap
The Nikkei 225 index traded 0.04% lower at 17,226.32 points on Tuesday morning in Tokyo, while the broader Topix index slipped 0.07% to 1,379.03 points.
Hong Kong's Heng Seng was trading 0.42% lower at 20,350.41 points, while the Shanghai Composite index opened little down at 2,857.44 points.
South Korea's Kospi index was trading almost flat at 1,972.41 points.
Australia's benchmark S&P/ASX 200 index was trading 1.29% lower at 5,118.90 points on Tuesday afternoon in Sydney.
New Zealand's S&P/NZX 50 equity gauge rose 0.62% to 6,605.74 points on Tuesday afternoon in Wellington, after hitting a record high of more than 6,607 points earlier on Tuesday.
Commodities Recap
Oil prices rose in early Asian trade on Tuesday, coming off six day lows reached the session before, as concerns that a six-week market recovery has gone beyond the fundamentals of oversupply start to take hold. U.S. crude futures were 17 cents higher at $37.35 a barrel at 0054 GMT. On Monday, they settled down 3.4 percent at $37.18 a barrel. Brent was also 17 higher at $39.70, after finishing $39.53 in the previous session.
Gold dropped for a third consecutive session on Tuesday to its lowest in almost two weeks, with investors focused on closely watched policy meetings of the U.S. due tomorrow. A rise in global equity markets over the past few days has provided headwinds to the gold market which has gained around 16 percent this year. Spot gold lost 0.6 percent to 1,227.20 an ounce by 0231 GMT while U.S. gold slid 1.3 percent to $1,228.40 an ounce. Spot gold earlier in the session fell to $1,225.70 an ounce, its lowest since March 2.
Treasuries Recap
New Zealand government bonds were mixed across the curve, with yields a shade firmer at the long end.
Australian government bond futures were off multi-week lows, with the three-year bond contract up 4 ticks at 97.935. The 10-year contract rose 3.25 ticks to 97.3375, while the 20-year contract held steady at 96.7875.
10-year U.S. treasury yield was at 1.957 percent vs U.S. close of 1.963 percent on Monday.
India benchmark 10-year bond yield falls 4 bps to 7.56 pct after retail inflation eases in February, Central bank's bond buy announcement aids.
