Global Markets:

  • China HSBC Services PMI: 50.7, Previous: 51.4
  • Australia Trade Balance: -0.12B, Expected: +0.30B, Previous: +0.90B
  • Hong Kong Manufacturing PMI: 49.1, Previous: 49.7
  • Bank of Japan’s Sato: Japan economy likely to resume moderate recovery trend from summer onward
  • Asian stock markets: Nikkei unchanged, Shanghai Composite unchanged, Hang Seng down 0.30 %, ASX down 0.10 %
  • Commodities: Gold at $1244, Silver at $18.81, Crude Oil at $102.36
  • Bonds: US 10 year yield at 2.59 

FX Update:

  • AUD – A disappointing Trade Balance number led to a drop to 0.9257 in AUD/USD, but the pair has already retraced the losses going into the European open. Offers in good size resting from 0.9310 up to 0.9320, while to the downside, there are strong bids from 0.9220 to 0.92. The pair is likely to be stuck in that range for a while.
  • EUR – The key event today for the Euro is of course the ECB meeting. Markets are expecting the bank to cut all three of its key interest rates by 10-15 bps. The main lending rate is projected to fall to 0.10 %, while the deposit rate would turn negative. Other tools include to extend the programme of making unlimited loans to banks well into 2016 and introduce a targeted lending programme to help push money to the private sector. Regarding QE, the ECB has avoided large-scale asset purchases so far as it’s much more complicated to apply it in an union of countries with 18 members and there would be serious resistance from Germany. Draghi will probably keep this option on the table, though. A positioning survey from Societe Generale, which included hedge funds, real money funds and corporates, showed that their clients are going into the ECB meeting short EUR/USD, moderately positioned and waiting to sell EUR/USD on rallies. Intraday, key support at 1.3585 where solid bids are resting. To the topside, offers at 1.3620-25 and large ahead of the 1.3650 level.
  • JPY – USD/JPY fell from a session high of 102.75 to 102.52 and the Nikkei is unchanged on the day. The pair remains bid overall and there is good buying interest from specs between 102.30 and 102.30. Topside, there are offers from hedge funds reported above 102.80. 

Upcoming Events:

  • 06:00 GMT – German Factory Orders (1.3 % MoM)
  • 09:00 GMT – Euro Zone Retail Sales (0.1 % MoM)
  • 11:45 GMT – ECB Interest Rate Decision (0.10 %)
  • 12:30 GMT – ECB Press Conference
  • 12:30 GMT – Canadian Building Permits (1.4 % MoM)
  • 12:30 GMT – US Initial Jobless Claims (310k)
  • 14:00 GMT – Canadian Ivey PMI (56.0)