Market Roundup
- EUR/USD holds close to top of 1.0650/1.06965 range.
- China C.Bank survey: Fewer households believe consumer prices unacceptably high in Q1 vs Q4 2014; fewer bankers believe monetary policy appropriate in Q1 vs Q4 2014; business confidence fell in Q1 vs previous quarter.
- Greek Finance Ministry says technical teams of experts are readying detailed list of reforms for Euro Zone.
- Greek govt spokesman says Greece will receive funding once detailed reforms are submitted to Eurogroup of EU finance ministers.
- Germany EconMin: After high-level meet sidelines of EU summit I'm bit more hopeful.
- RBA Stevens reiterates that the AUD decline may not be enough.
- OECD expects 7% China growth in 2015, urges freer Yuan.
- United Kingdom Feb PSNB, mm increases to 6.216 bln gbp (consensus 7.700 bln gbp) vs previous -8.934 bln gbp (revised from -9.405 bln gbp).
- United Kingdom Feb PSNB ex banks increases to 6.867 bln gbp (consensus 8.500 bln gbp) vs previous -8.754 bln gbp.
- United Kingdom Feb PSNCR, mm increases to 0.025 bln gbp vs previous -18.921 bln gbp.
- European Union Jan Current Account sa, increases to 29.4 bln eur vs previous 17.8 bln eur.
- European Union Jan Current Account nsa, decreases to 8.2 bln eur vs previous 29.2 bln eur.
- European Union Jan Net Investment Flow, decreases to -24.8 bln eur vs previous 67.2 bln eur.
- Germany Feb Producer Prices yy increases to -2.1 % (consensus -1.9 %) vs previous -2.2 %.
- Germany Feb Producer Prices mm increases to 0.1 % (consensus 0.2 %) vs previous -0.6 %.
Economic Data Ahead
- (0830 EDT/1230 GMT) Canada Consumer Price Index yy, consensus 1%, previous 1%
- (0830 EDT/1230 GMT) Canada CPI BOC Core mm, consensus 0.5%, previous 0.2%
- (0830 EDT/1230 GMT) Canada Retail sales mm, consensus -0.7%, previous -2.0%
Key Events Ahead
- N/A EU Summit in Brussels
- (0945 EDT/1345 GMT) FedTrade 30-year Ginnie Mae (max $975 mln)
- (1020 EDT/1420 GMT) FRB Atlanta's Lockhart (voter, moderate) on monetary policy and the economy; Athens, GA
- (1130 EDT/1530 GMT) FRB Chicago's Evans (voter, dove) in panel on monetary policy; Washington, DC
FX Recap
The dollar is on course for the first albeit small weekly drop in four weeks even after the rebound yesterday of the FOMC-induced losses. The strong correlation of the USD with risk assets at present (0.8 for selected G10 and EM pairs including the EUR/USD) demonstrates that even with the Fed sidelined on rates (and uncertainty keeping volatility high), there is not a lot that will stop the USD from extending its 7-month uptrend.
EUR/USD barely shifting from 1.0680 in the European session, the 1.0400/1.0500 area is still the final stop before parity. The quiet conditions today should heighten the magnetic effect of large vanilla option expiries at 1.0700. The cash crunch in Greece and score of the anti-austerity movements in Andalusia's election this weekend could lead to a messy start to next week for the single currency.
USD/JPY traded in a range of 120.61-121.20, light stops at 121.05 have been triggered. While bears desperately need a daily close back below the tenkan and kijun lines at 120.66 and 120.08 respectively to turn the underlying bias negative, bulls have overcome Thursday's121.04 high which increases the short-term upside potential. On the downside there are bids which remain intact at 120.50. Importantly, there are 3.7 yards of 121.00 strikes set to expire at the NY cut which will act as a magnet in early NY trading. EUR/JPY has recovered to 128.72-129.42 today on pre-weekend short-covering, but solid resistance at an hourly 129.50 high posted on Thursday caps gains. AUD/JPY has seen a 92.40-92.90 range, while GBP/JPY range has been 178.00-178.75.
GBP/USD ran into resistance pre-1.4779 in Asia after extending north from 1.4689 (Thursday's low), with a drop to 1.4722 ensuing. 1.4779 is 38.2% of 1.4925 (Thursday's Ldn am high) to 1.4689. EUR/GBP has traded a 30 pip range thus far today, 0.7224-0.7254. Resistance levels include 0.7274 (Thursday's high) and 0.7289 (Wednesday's high).
EUR/CHF was tight and steady trading resumes after post-FOMC volatility. The cross continues under pressure close to yday's 1.0530 lows and plays 1.0543/1.05745 on the day thus far. USD/CHF is easing intraday and trades 0.98660/0.99060 with some downside risk seen.
USD/CAD eased to an intra-day low of 1.2658 in early European trade, with a rise towards 1.27 (option expiry) ensuing. Canadian Feb inflation and Jan retail sales data is due at8.30am ET. CPI f/c +0.7% m/m, +1.0% y/y. Retail sales f/c -0.7%. Softer than expected Canadian data could propel USD/CAD towards 1.28. WTI oil was trading at $43.70/barrel at6.30am ET, 30 cents lower on the day.
AUD/USD ran into resistance pre-0.77 (option expiry) in Asia after extending north from 0.7612 (Thursday's low). RBA Governor Stevens said recent AUD decline would help support the Australian economy. Interest rate futures suggest there is a 40% chance of a 25bp RBA rate cut on Apr 7, compared to a 50% chance 24 hours ago (35% chance on Tuesday).
NZD/USD scaled an intra-day peak of 0.7459 in early European trade after extending north from 0.7373 (Thursday's low). AUD/NZD is trading a quarter-cent above 1.0284 (Mar 4/5 multi-year low) as it consolidates recent-day losses.
