Global Markets:

  • Japan Trade Balance: -800B, Expected: -590B, Previous: -2,790B
  • Japan Imports (y/y): 9.0%, Expected: 7.4%, Previous: 25.0%
  • Japan Exports (FEB) (y/y): 9.8%, Expected: 12.4%, Previous: 9.5%
  • Australia Westpac Leading Index (FEB) (m/m): -0.1%, Previous: -0.2%
  • New Zealand Current Account: -1.43B, Expected: -1.41B, Previous: -4.78B
  • BOJ’s Board Member Kiuchi says there is room to reconsider the central bank’s 2% inflation target
  • BOJ’s Kiuchi says 2% inflation target exceeds real strength of the economy, sees more downside risks for prices
  • Asian equity markets are mixed; Nikkei is up 1.50 % while the Shanghai Composite lost 0.90 %
  • Australia’s ASX gained 0.20 %; the Hang Seng dropped 0.10 %
  • Gold is consolidating after another down day; trading at $1356 (-0.20 %)
  • US 10 year yield stands at 2.69

FX Flows/Orders:

  • AUD/USD took out the large offers 0.9120-40, but more supply is seen ahead of the 200 daily MA at 0.9149
  • Bids resting at 0.91 and in better size at 0.9080/85
  • Heavy cross flows noted – GBP/AUD and EUR/AUD selling from leveraged names
  • The large bids at 101.20-25 we’ve mentioned the past two days in USD/JPY continue to keep the downside limited; large stops now building around the 100.90 level
  • To the topside, leveraged names have offers at 101.70, while solid supply from Japanese accounts is noted pre-102.00
  • EUR/USD bids rebuilding at 1.3880, while offers pre-1.3950 increasing in size; dealers report large stops above 1.3965

Market Sentiment:

Sentiment remains unclear and price action choppy. Markets rallied yesterday after Russian President Putin’s speech as he stated that Russia has no intentions of invading the eastern region of Ukraine, but the reaction in FX was short-lived. Global equities markets still closed the day higher, while the US Dollar was under pressure. Turnover was especially high in USD/JPY, with real money names and hedge funds the main sellers. The 101.20/25 area is holding for now, but a break beneath would pave the way for a 100.80 test.

UK unemployment data and the BoE MPC Meeting minutes will be the key events for the upcoming European session. Market expectations are for a rate of 7.2 %, while for the minutes, traders are looking for further clarity on the bank’s forecast for spare capacity. The main event of the day is the FOMC meeting. While expectations are more divided than usual, most expect a QE taper by $10 billion to $55 billion, a drop of the 6.5 % unemployment treshold and no major changes in the Fed’s GDP and inflation forecasts. There is potential for both dovish and hawkish surprises.

Upcoming Events:

  • 09:30 GMT – Bank of England MPC Meeting Minutes
  • 09:30 GMT – UK Unemployment Rate (7.2 %)
  • 09:30 GMT – UK Claimant Count Change (-25k)
  • 10:00 GMT – Swiss ZEW Expectations (25.0)
  • 12:30 GMT – US Current Account (-88B)
  • 17:45 GMT – SNB Chairman Thomas Jordan speaks
  • 18:00 GMT – Fed Interest Rate Decision/FOMC Statement
  • 18:30 GMT – Fed Chair Yellen speaks
  • 21:45 GMT – New Zealand GDP QoQ (0.9 %)