Global Markets:

  • Chinese HSBC Manufacturing PMI 48.1, Expected: 48.7, Previous: 48.5
  • Asian markets are trading higher as of 05:00 GMT, despite worse than expected Chinese econ data
  • Japan’s Nikkei is up almost 2 %; Shanghai Composite gained 0.50 %
  • Hang Seng rose 1.10 % while Australia’s ASX is almost unchanged on the day

 FX Flows/Orders:

  • Disappointing Chinese data hit the Aussie Dollar, but AUD/USD is recovering and AUD/JPY has fully retraced the post-PMI drop amid good demand from speculators
  • AUD/USD has bids building from 0.9020 to 0.90, with local corporations reported to be bidding there as well
  • To the topside, offers are getting thicker above 0.9120 towards the 200 daily MA around 0.9143
  • Euro gained briefly from the AUD weakness, as EUR/AUD shorts covered
  • Dealers note stops building above 1.3825, while offers seen at 1.3810 and in better size towards 1.3850
  • To the downside, 1.3750 remains the key level; stops are sizeable beneath and system funds are looking to sell a break
  • Traders noted stop hunting in both GBP/JPY and GBP/AUD and are blaming those for the move to 1.6460 in GBP/USD
  • In USD/JPY, there was an attempt to trigger the stops sub-102, but demand was strong; mostly from Japanese accounts
  • Offers are lined up at 102.75-80 and ahead of 103.00; 103.10 is the next key tech resistance (top of daily Ichimoku cloud)

 Market Sentiment:

In European markets, the focus this week will be on Euro Zone PMI data, as well as German and EZ consumer confidence. Markets are expecting a drop in PMI data, correcting the recent decoupling between high Euro Zone PMIs and lower US & Chinese PMI data. An increasing divergence between econ data out of the Euro Zone and US data would increase the pressure on the EUR/USD.

 It will be a busy week for UK markets, with the inflation data out on Tuesday, followed by retail sales on Thursday and GDP on Friday. The market is expecting inflation to have eased from 1.9 % to 1.7 % in February and most of the banks see little downside risk for the release. On the other side, lower shop prices might have helped improve retail sales and a rebound could add to the supportive sentiment for the British Pound.

 US traders will be focused on the Markit PMI release today and Leading Indicators and Durable Goods data later this week. Finally, we have consumer confidence data on Friday, which is expected to have improved.

 The econ calendar for this week’s Asian trading sessions is light, with Friday’s Japanese CPI release being the key event. RBA Governor Stevens will speak on Wednesday and while he will have a more difficult time talking the Aussie Dollar down this time, it could trigger some short-term volatility.

 Good luck!

 Upcoming Events:

  • 08:00 GMT – French Manufacturing PMI (49.8)
  • 08:00 GMT – French Services PMI (47.5)
  • 08:30 GMT – German Manufacturing PMI (54.6)
  • 08:30 GMT – German Services PMI (55.5)
  • 09:00 GMT – Euro Zone Manufacturing PMI (53.0)
  • 09:00 GMT – Euro Zone Services PMI (52.6)
  • 13:45 GMT – US Manufacturing PMI (56.5)