Global Markets Overview:

  • Yuan’s volatility rises to 18 month high of 2.73% after PBOC widened trading band from 1% to 2% over the weekend
  • Crimea votes to join Russia
  • Asian equity markets are mostly lower this morning
  • Nikkei and the Hang Seng index lost both 0.50 % on the day
  • Australia’s ASX dropped 0.20 %
  • Shanghai is up 0.50 % as traders there focused on domestic news
  • S&P 500 futures are trading at 1832 – almost unchanged from the open

 FX Flows/Orders:

  • Flows were light during the Asian session
  • USD/JPY rose up to 101.55 and dealers report decent bids resting at 101.20
  • Japanese names are bidding at the 101.00 level; stops building beneath
  • Some offers at 101.80, but nothing major until 102.00
  • Leveraged funds have offers from 1.3925 to 1.3950 in EUR/USD, while big stops are now located at 1.3970

Market Sentiment:

It was expected that Crimea would vote to join Russia, so that didn’t move the markets overnight. However, the uncertainty remains and traders are likely to stay risk averse until signs of a diplomatic solution emerge.

Meanwhile, the People’s Bank of China (PBoC) announced that the USD/CNY trading band will be widened from 1 % to 2 %, introducing greater exchange rate flexibility. The recent weakness in Chinese econ data and on-going worries about local financial sector risks will likely help USD/CNY  to appreciate further over the short-term.

Looking ahead, the FOMC meeting on Wednesday will be the main risk event. The Fed is likely to look through the weakness in econ data during the past few months, given the weather distortions. Traders will be focusing on the Fed’s future path of policy through forward guidance and econ data projections.

Today, we have the European CPI release with the forecast being 0.8 %. Tuesday events include the RBA meeting minutes, CPI data out of the US and Bank of Canada Governor Poloz speaking. On Wednesday, the Bank of England will release the MPC Meeting Minutes and the FOMC will release it’s statement, followed by a speech from Fed Chair Yellen. New Zealand GDP will be released later in the day. Thursday will be a bit more light, with the US Existing Home Sales and Philly Fed Manufacturing Index being the main events. Finally, Canadian CPI and Retail Sales data is scheduled for the Friday US session.

Upcoming Events:

  • 10:00 GMT – Euro Zone Core CPI – (1.0 % YoY)
  • 10:00 GMT – Euro Zone CPI – (0.4 % MoM), (0.8 % YoY)
  • 12:30 GMT – NY Empire State Manufacturing Index – (6.00)
  • 13:15 GMT – US Industrial Production – (0.1 %)
  • 14:00 GMT – US Housing Market Index (50.0)
  • 15:00 GMT – German CB President Weidman speaks