Global Markets:

  • Japan PMI Manufacturing: 53.9, Previous: 55.5
  • Japan Industrial Production (m/m) [P]: -2.3%, Expected: 0.3%, Previous: 3.8%
  • New Zealand ANZ Business Confidence (FEB): 67.3%, Previous: 70.8%
  • New Zealand ANZ Activity Outlook (MAR): 58.2%, Previous: 58.5%
  • Australia Private Sector Credit (FEB) (m/m): 0.4%, Expected: 0.4%, Previous: 0.4%
  • Australia Private Sector Credit (FEB) (y/y): 4.3%, Previous: 4.1%
  • China sets yuan reference rate at 6.1521 against the US Dollar, the weakest since September

 FX Flows/Orders:

  • Dealers report larger offers at 103.00 in USD/JPY on the interbank platforms
  • Good tech resistance at 103.10 with the top of the daily Ichimoku cloud located there; stops in decent size resting through 103.20
  • Solid intraday support at 102.50 and larger bids seen towards 102.10
  • AUD/USD consolidating after profit-taking sales pre-0.93 have capped the topside for now; bids at 0.9180, but 0.9140 (200 DMA) now key support
  • EUR/JPY had a strong rally on Friday; large stops above 142.00 (+ momentum buyers on a break), but solid resistance ahead
  • GBP/USD looking a bit overbought on the hourly timeframes; failed to take out 1.6667 resistance last week, mild bids at 1.66, better demand seen at 1.6570
  • Tech support levels: 1.6615 (55 hourly MA), 1.6598 (Friday low), 1.6576 (100 hourly MA), 1.6554 (short-term base, 27/03 low)
  • French bank BNP Paribas recommends a long AUD/NZD position at 1.0660 with a 1.0490 stop and 1.11 target

Market Sentiment:

There are plenty of important data releases this week, with the NFP numbers on Friday being the highlight. The last FOMC meeting indicated that the FED is continuing with it’s transition from explicit forward guidance to full data dependency. The USD remains relatively weak despite the hawkish Fed, but the switch to increased data dependency will mean that the central bank will ultimately have to react if econ data comes in stronger than expected. A strong NFP would likely hit the EUR/USD most given the increasing EZ/USD rates expectations differentials, while benefiting the USD/JPY.

 Expectations about further ECB easing may increase this week after the Euro Zone CPI release. While forecasts are suggesting a 0.6 % YoY print, many banks note that the risks are skewed toward an lower print and a lower CPI would amplify risks of an ECB response.

 The Australian Dollar remains resilient and most banks expect the RBA to stick to it’s usual script noting that the AUD is still high by historical standards, but not using any aggressive „verbal intervention“. The 200 daily moving average (0.9140) is now key for AUD/USD and buying dips towards that level is the preferred strategy for now.

Upcoming Events:

  • 07:00 GMT – German Retail Sales (-0.5 % MoM, 0.8 % YoY)
  • 07:45 GMT – French GDP (0.3 % QoQ)
  • 08:00 GMT – Swiss KOF Leading Indicators (2.03)
  • 10:00 GMT – Euro Zone CPI (0.6 % YoY)
  • 10:00 GMT – Euro Zone Core CPI (0.8 % YoY)
  • 13:30 GMT – Canadian GDP (0.4 % MoM)
  • 14:45 GMT – US Chicago PMI (59.0)
  • 14:55 GMT – Fed Chair Yellen speaks
  • 18:15 GMT – Bank of England Governor Carney speaks