Market Roundup
- Dollar index rose to 95.505, highest since Sept 2003 after China rate cut.
- AUD/USD hit a 7850 high on China rate cut, before quickly selling off.
- USD jumps to 2-year high vs China's yuan at 6.2737 after rate cut.
- Sterling slips from 7-y 0.7235 high vs euro as political risks weigh.
- China cut official deposit and lending rates 25 bps each.
- UK Feb Nationwide house price index +5.7% y/y vs previous 6.8%. 6.1% expected.
- UK Jan BOE consumer credit 0.817b vs previous 0.516b revised. 0.900b expected
- UK Jan Mortgage lending 1.558b vs previous 1.563b revised. 1.700b expected.
- UK Jan Mortgage Approvals 60.786k vs previous 60.349b revised. 61.0k expected.
- UK Jan M4 money supply -0.8% vs previous 0.1%.
- UK Feb Markit/CIPS Mfg PMI 54.1 vs previous 53.1. 53.4 expected.
- EZ Feb Markit Mfg final PMI 51.0 vs previous 51.1. 51.1 expected.
- EZ Feb Inflation ex food/energy flash 0.6% vs previous 0.6% revised.
- EZ Feb Inflation flash -0.3% y/y vs previous -0.6%. -0.4% expected.
- EZ Jan Unemployment rate 11.2% vs previous 11.3% revised. 11.4% expected.
- Swiss Feb Mfg PMI 47.3 vs previous 48.2. 47.0 expected.
- Swiss sight deposits rise to 383.657b in w/e Feb 27 fm 382.965b a wk earlier.
Economic Data Ahead
- (1330 GMT) US Jan personal income, +0.4% m/m; previous +0.3%.
- (1330 GMT) US Jan personal consumption, -0.1% m/m sa; previous -0.3% sa, -0.1% nsa.
- (1330 GMT) US Jan core PCE index, +0.1% m/m; last unchanged m/m, +1.3% y/y.
- (1400 GMT) Belgium Q4 GDP - revised; preliminary +0.1% q/q.
- (1445 GMT) US Feb Markit Manufacturing PMI - final; prelim 54.3.
- (1500 GMT) US Feb ISM Manufacturing PMI, 53.1 expected; last 53.5.
- (1500 GMT) US Jan construction spending, +0.3% m/m expected; last +0.4%.
- 1800 US Jan Dallas Fed PCE index; last +0.7%.
Events Ahead
(1645 GMT) FedTrade operation 30-year Ginnie Mae (max $875 mln)
FX Beat
EUR/USD saw new lows in Asia at 1.1160, scope is seen to 11 yr low fm Jan 26 at 1.1098. Intrday has corrected oversold levels and traders advise on using upticks as opportunities to get short. Close below long-term 61.8% (1.1212) of 2000/2008 rise reinforces bearishness and it opens the path to 1.0072, the
76.4% retracement. Euro zone final Feb manufactuing PMI recorded at 51.0
against the flash estimate of 51.1. Weak euro boosts new export orders strong
and German, Italian manufacturing PMIs showed stronger activity. Ranges are
likely seen between 1.1150-60 buyers and 1.1220-30 sellers. Option expiries at
1.1075 (305M), 1.1200 (673M), 1.1300 (654M), 1.1320-25 (908M).
USD/JPY sees scope firmly on the upside for gains to 120.00 and beyond,
market continues to trade above the daily cloud which spans 117.75-118.66.
Traders are looking to get long at 119.35 which is ahead of the tenkan line which
was at 119.13, a daily close back below below 119.13 will defer. There is 1.7B
worth of the 120.00 NY cut expiries, also 1.9B at 118.90, pivot point comes in at
119.96, offers noted ahead of 120.00. While, the traders are looking to get
EUR/JPY long at 133.50 for gains to 135.00, Tenkan line was seen at 133.43,
also 50% retrace of 130.16-136.70 up-leg, underpins. Tenkan and kijun lines
were positively aligned, which indicates the upside potential is intact. A daily
close below the 133.43 level, however, will defer.
AUD/USD spiked to 0.7850 stopped out the short trade at entry level in Asia.
The bias remains with the bears so the offer set at overnight highs, the pair is on
track for a bear engulfing line today at present and the trend indicators have
shown the scope for a further sell-off. In the early Asian session, it fell to
$0.7780 after mixed local economic data and concerns about China's slowing
economy reinforced the case for more interest rate cuts, pulling the New Zealand dollar lower. Resistance was seen at last week's peak of $0.7914, while support was found at $0.7740. "If China is going bad, it's not good for Australia, and it's even worse for New Zealand," said ASB bank on Monday. Markets now price in 56 pct chance of RBA's 25 bps cut to 2.0 pct. The intraday bias remains neutral
for and the price actions from 0.7625 are viewed as consolidation pattern. Break
of 0.7739 minor support will indicate such consolidation is possibly completed.
GBP/USD fell on Monday, retreating from a seven-year high against the euro and
an eight-week peak against the dollar as May's potential general election
clouded the outlook for the currency. The British house prices fell in February
for the first time in five months also hurt sentiment. The euro was up 0.3 pct at
72.70 pence, recovering from a seven-year low of 72.35 struck in Asia. Againstthe dollar, sterling was down 0.15 pct at $1.5405. The British manufacturing growth failed to provide a lift to the pair. "With Governor (Mark) Carney easing traders' fears by illustrating UK inflation risks as temporary, and very littlepositive economic news coming out of Europe, euro/sterling looks set for a
future downside move to 70 pence," said FXTM in a note. The traders ran long
pounds into the data, especially versus the euro, above 200-HMA at 1.5438 and
100-HMA at 1.5458 needed to excite bulls. Below 1.5480 to trigger bearish
reaction, GBP 150mln expiries 1.5410 for NY cut.
USD/CHF was tight, 0.9565 long stop came very close overnight, currently the
pair is slightly easier, intraday 0.9545-54 region was breached. The sustained
breakout will change directional bias and close above 0.9565 is a reversal buy
with 1.00 target, the rising 10 DMA at 0.9480 gives support. Below 0.9370 minor support will turn bias back to the downside. However, the sustained trading
above 0.9553 would pave the way for a test on 1.0239 resistance. The prior
break of 0.8698 support indicates that medium term rebound from 0.7065 has
completed at 1.0239.
USD/CAD traders trying to get long at 1.2430 for gains to 1.2600 and beyond,
layers of support have formed between 1.2353/1.2388; February 3/26 lows. A
daily close below 1.2286 - 23.6% of 1.0620 to 1.2800 up-leg defers.
