Global Markets: 

  • Asian markets are mixed as of 05:00 GMT
  • The Nikkei is unchanged on the day, while the Shanghai Composite lost 0.40 %
  • Hang Seng up 0.10 %; Australia’s ASX lost almost 1 %
  • Gold at $1327 (+0.60 %), Silver at $20.04 (+0.50 %), Crude Oil at $104.27 (+0.50 %)
  • US 10 year yield stands at 2.614

FX Flows/Orders: 

  • EUR/USD – initial support at 1.3820; bids in better size towards 1.3780, sizeable stops below. Topside, offers from sovereign names pre-1.3920.
  • AUD/USD – key support at 0.9320/30, large stops sub-0.93. Offers seen ahead of 0.9450 and larger ahead of the 0.95 barrier option.
  • Gold (XAU/USD) – bid on renewed tensions in Ukraine and broad USD weakness. Struggling ahead of the $1330 level, but breakout above would pave the way for $1353 and eventually a $1392 retest.

 Market Sentiment:

 While the upcoming Easter holidays might discourage traders from taking any big bets, there is a solid amount of econ data this week. Traders will focus on US and China growth prospects, with Retail Sales and Industrial Production from both countries being released this week. Fed chair Yellen will speak twice (Tuesday & Wednesday) and most of the banks expect to hear further dovish talk. The message the Fed is trying to send is that monetary policy will be quite accommodative even as the economy recovers and inflation gradually rises toward 2 %. Previously, numerical guidance helped traders to define the market’s view of the Fed’s reaction to econ data releases. Without it, the message takes on a more critical role because it is less clear how improving data will shift the Fed’s outlook. We also have the Bank of Canada meeting scheduled for Wednesday, with the press conference shortly after, and Bank of Japan Governor Kuroda speaking on the same day. The upcoming BoC meeting might encourage CAD shorts, leading to a rebound in USD/CAD and the cross pairs.

In Europe, the top releases will be UK CPI (Tuesday) and employment (Wednesday), as well as German ZEW (Tuesday) and Euro Zone CPI (Wednesday). Talk is cheap and the continuous effort from ECB members to talk the Euro down is obviously failing. Draghi realized that and stated over the weekend that “the European Central Bank will ease monetary policy further if the euro keeps strengthening”. This led to a 50 pips drop in EUR/USD at the open and the pair is now consolidating around 1.3850. This might cause some short-term weakness in the Euro, but if the Fed continues to be moderately dovish, talk alone will not prevent a breakout above 1.40.

Upcoming Events: 

  • 09:00 GMT – Italian CPI (0.1 % MoM, 0.4 % YoY)
  • 10:00 GMT – Euro Zone Industrial Production (0.2 % MoM, 1.5 % YoY)
  • 13:30 GMT – US Core Retail Sales (0.5 % MoM)
  • 13:30 GMT – US Retail Sales (0.8 % MoM)
  • 15:00 GMT – US Business Inventories (0.5 % MoM)