Market Roundup
- London Mayor Boris Johnson adopts Brexit stance.
- GBP/USD falls to 1.4136 low from 1.4360 Asia high.
- USD/JPY plays 112.35-113.26 EUR/JPY 125.02-125.55.
- Swiss producer prices -5.3% y/y vs -5.5% previous.
- Germany Flash Feb Mfg PMI 50.2 vs 52.3 previous, 52.0 expected.
- Germany Flash Feb Service PMI 55.1 vs 55.0 previous, 54.7 expected.
- EZ Flash Feb Mfg PMI 51.0 vs 52.3 previous, 52.0 expected.
- EZ Flash Feb Service PMI 53.0 vs 53.6 previous, 53.3 expected.
- UK Feb CBI Trends Orders -17 vs -15 previous, -12 expected.
- SNB total sight deposits up in latest week- vs 473.417.
- HSBC says London would be dominant FX center in event of Brexit.
- Swiss referendumFeb 28spooks international businesses - Financial Times.
- Change of regulator sets stage for overhaul of China's markets-WSJ.
- Kuroda - Reiterates mantra, excessive risk aversion behind market rout.
Economic Data Ahead
- (0830 ET/1330 GMT) The Federal Reserve Bank of Chicago releases its national activity index for January, which showed a reading of -0.22 in December.
- (0900 ET/1400 GMT) Mexico's National Statistics Institute will release the retail sales data for December. Retail sales in November rose 0.5 percent compared to the previous month.
- (0945 ET/1445 GMT) The financial firm Markit releases its manufacturing PMI for Feb which is expected to drop slightly to 52.3 from 52.4 in January.
- (1030 ET/1530 GMT) The Conference Board is set to release its reading of Australian leading index for December, the index rose 0.3 percent in November.
Key Events Ahead
- (1300 ET/1800 GMT) ECB's Sabine Lautenschläger Speech.
- (1430/1930 GMT) FedTrade operation 15-year Fannie Mae / Freddie Mac (max $575 mn).
FX Recap
USD: The dollar firmed to 112.86 yen, 0.2 percent above its levels at the end of last week, and off Friday's one-week low of 112.30. The dollar index jumped till 97.28 at the time of writing and was trading around 97.24.
EUR/USD: The euro was broadly weaker, down 0.4 percent to $1.1085, just above last week's low around $1.1064. The pair sees major support at 1.1050 (200 day MA and also 1.13% retracement of 1.10865 and 1.13350) and resistance at 1.11500, a break above targets 1.1200/1.12450. Any break below 1.1050 will drag it till 1.100/1.0920. Against the yen, the common currency fetched 125.49 yen, not far from 2 1/2-year low of 125.02 yen touched on Friday and earlier on Monday.
USD/JPY: The Japanese yen has recovered after making a low of 112.30 and was trading around 113.14. The short term trend is slightly weak as long as resistance 113.50 (200 day HMA) holds. On the lower side major support is around 112.30 and break below targets 111.80/110. The minor resistance is around 113.50 and break above targets 115 /116.20.
GBP/USD: The Sterling dropped against the dollar and euro on concerns Britain may vote to leave the European Union. It fell 1.5 percent to a 3-week low of $1.4175 after London's Mayor supported 'Brexit Camp', putting it on track for its biggest daily percentage loss in 11 months, while the euro rose 1.1 percent to 78.17 pence. The pair has broken major support at 1.4200 and declined till 1.4157. The short term trend is slightly weak as long as resistance 1.4280 holds. On the lower side any break below 1.4200 will drag it down till 1.4140/1.40780. The overall bearish invalidation is only if it closes above 1.4580. The pound dipped below 160 yen for the first time in more than two years and dropped nearly 0.7 percent to A$1.9954.
USD/CHF: The pair has made a high of 0.9956 at the time of writing and slightly declined from that level. It was trading around 0.99477. The short term trend is slightly bullish as long as support 0.9900 holds. On the lower side major support is around 0.9900 and any break below 0.9760 will it down till 0.9850/0.9800. On the higher side minor resistance is around 0.9960 and break above will take the pair till 1.00/1.00350.
AUD/USD: The Australian was around half a percent higher on Monday. It has broken major resistance 0.7185 and jumped till 0.7197. It was trading around 0.7187 and the short term trend is slightly bearish as long as support 0.7135 holds. On the higher side major resistance is around 0.7185 and break above targets 0.7240/0.7300. The major support is around 0.7135 and break below will drag the pair till 0.7100/0.7075. The Aussie rose 0.4 percent to 80.84 yen, having bounced 3 yen since hitting a low earlier this month.
NZD/USD: The New Zealand dollar was treading water at $0.6643, as a dearth of local data led investors to wait for leads from offshore, it gained 0.5 percent to 75 yen. Sterling fell to its lowest since June at NZ$2.1383 to be last at NZ$2.1500.
Equity Recap
The European and Asian shares advanced on Monday, the pan-European FTSEurofirst 300 index gained 1.2 percent, lifted by miners as the price of oil and other commodities rose. London's FTSE 100 index rose 1.1 percent, France's CAC 40 gained 0.9 pct and Germany's DAX climbed 1 pct.
Tokyo's Nikkei closed up 0.90 pct at 16,111.05, MSCI's broadest index of Asia-Pacific shares outside Japan gained 0.9 percent, having rebounded more than 4 percent last week. China's CSI300 Index ended up 2.2 pct at 3,118.87 points and Shanghai Composite Index gained 2.3 pct at 2,927.18 points. Australia's S&P/ASX 200 Index closed up 1.05 pct at 5,004.90 points, while HK's Hang Seng Index rose 0.9 pct.
Commodities Recap
Oil prices climbed on Monday following steep losses in the previous session, supported by a fall in the U.S. rig count. U.S. crude futures rose over 3 percent to above $30 per barrel, trading at $30.59 at 0809 GMT. International benchmark Brent was also up 2.4 percent at $33.83 per barrel. Both contracts fell almost 4 percent on Friday.
Gold extended losses below its highest level in a year on the stronger dollar and equities, but it remained supported above $1,200 an ounce as caution in financial markets prompted investors to park money into bullion funds. By 1010 GMT the spot gold slumped over 2 percent to a session low of $1,203.19 an ounce, before paring some losses to trade at $1,213.80.
Treasuries Recap
The 10-year U.S. Treasuries yield stood at 1.766 percent vs U.S. close of 1.748 percent on Friday. The German 10-year yields were flat at 0.2 percent.
The Japanese government bond prices inched higher as sharp falls in swap interest rates surprised market players who were eyeing for a softer market ahead of a 40-year bond auction the following day. The 10-year JGB yield dropped 1.0 basis point to minus 0.005 percent while the 5-year yield fell 1.0 basis point to minus 0.180 percent. The 40-year JGB yield dropped 5.0 basis points to 1.110 percent while the 30-year yield fell 3.0 basis points to 0.990 percent.
UK Gilts opened 10 ticks lower than the close of 121.75bp as core markets reacted to higher equities and a bounce in oil prices. 10-year cash yields were hovering in a narrow 3bp range with resistance noted from former highs at 1.485% and support from former lows around the 1.42% region.
Australian government bond futures eased, with the 3-year bond contract off 4 ticks at 98.190. The 10-year contract dropped 3 ticks to 97.5400, while the 20-year contract was also down 3 ticks at 97.0150. The spread between 10- and 3-year government bonds stood at 65 basis points, having shrunk to 64 basis points on Friday, the smallest in 10 months. The New Zealand government bonds were a touch softer with yields 1 basis point higher.
