Global Markets: 

  • China Trade Balance: $7.71B, Expected: $0.90B, Previous: $-22.98B
  • China Imports (y/y): -11.3%, Expected: 2.4%, Previous: 10.1%
  • Australia Unemployment Rate s.a.: 5.8%, Expected: 6.0%, Previous: 6.0%
  • Australia Part-time employment: 40,200, Previous: -33,200
  • Japan Core Machinery Orders (y/y): 10.8%, Expected: 17.6%, Previous: 23.6%
  • Japan Bank lending (y/y): 2.1%, Previous: 2.2%
  • UK RICS House Price Balance: 57%, Expected: 44%, Previous: 45%
  • New Zealand Business NZ PMI: 58.4, Previous: 56.2
  • China’s Premier Li says China still faces downward pressure on economic growth
  • China’s Premier Li says China can accept growth rate less than 7.5%
  • Asian stock markets are mixed as of 05:00 GMT; the Nikkei and Shanghai Composite are unchanged on the day, while the Hang Seng is up 0.20 % and the ASX gained 0.40 %
  • Gold at $1316 (+0.80 %), Silver at $19.97 (+1.0 %), Crude Oil at $103.28 (-0.30 %)
  • US 10 year yield stands at 2.69

FX Flows/Orders: 

  • USD/JPY – large bids reported between 101.20 and 101.30; initial support at 101.50, but the pair continues to trade with an offered tone and any larger rally is sold into by leveraged names. To the topside, offers resting at 102.20 (+ tech resistance with the 55HMA there as well).
  • EUR/USD – profit-taking flows noted pre-1.3880 + selling from sovereign names. The level is pivotal for the pair and a clear break above could pave the way for another push towards 1.40. Selling interest is decreasing with traders rather focusing on pairs like EUR/AUD. Expect bids at 1.3820 and in front of 1.38, while stops are clustering 1.3785-95.
  • GBP/USD – similar pattern as in EUR/USD, with the 1.6820 level (2014 high) holding well. The Bank of England Minutes are likely to be a non event with no change in rates and QE expected. Bids are building at 1.6720/30, while 1.6680 is now pivotal tech support.
  • USD/CAD – things have turned bearish for the pair as we closed below the key 1.09 level. A further decline is likely; selling rallies towards 1.0940/50 for a move to 1.0750 seems like the best strategy for now. No talk of barrier options yet, but probable there are structures at 1.08.
  • AUD/USD – large rally after upbeat employment data; barrier option at 0.94 knocked out. Strong demand led by leveraged names noted and the Aussie is very likely to stay bid throughout the day. Short-term support at 0.9380 (21 HMA) and 0.9351 (55 HMA); good bids reported at 0.9320/30. Topside, barrier option @ 0.95, offers in front of it.
  • NZD/USD – not much standing in the way of a test of the 2011 high near 0.8840. Key short-term support at 0.8650.
  • Cross Pairs – keep an eye on the 140.00 level in EUR/JPY as there are large stops resting just beneath it and down to 139.80.

Market Sentiment:

The US Dollar extended it’s losses after the FOMC minutes, which were released in yesterday’s late NY trading session. The report indicated that the Fed is more cautious towards hiking interest rates and that the FOMC thinks the market has overreacted by expecting a more aggressive cycle of rate hikes. The minutes weren’t really dovish, but definitely less hawkish than traders were expecting. US yields declined, while stock markets bounced (S&P 500 +1.10 %).

The econ calendar is relatively light for today, with the BoE rate decision the highlight of the upcoming EU session, while during the NY one, the focus will be on Jobless Claims data.

Upcoming Events: 

  • 07:45 GMT – French CPI (0.6 % MoM)
  • 09:00 GMT – ECB Monthly Report
  • 12:00 GMT – Bank of England Interest Rate Decision (0.50 %, 375B in QE)
  • 13:30 GMT – US Initial Jobless Claims (320k)
  • 13:30 GMT – US import Price Index (0.2 % MoM)