Global Markets:

  • China (CNY) Chinese FDI: 2.80%, Previous: 5.00%
  • Australia (AUD) New Motor Vehicle Sales (m/m): 0.3%, Previous: 0.0%
  • RBA: GDP growth expected to be below trend in the next year or so, uncertainties will take some time to resolve
  • RBA: Only modest jobs growth expected in the month ahead, low wage growth to persist for some time
  • RBA: Hard to judge if low rates will offset weak mining, fiscal retrenchment. Uncertainties likely to take some time to resolve
  • RBA: Members noted that the exchange rate remained high by historical standards, particularly given the further decline in commodity prices over the past month
  • Asia stock markets: Nikkei is up 0.50 %, Shanghai Composite gained 0.75 %, Hang Seng fell 0.30 %, ASX is unchanged on the day
  • Commodities: Gold at $1268, Silver at $19.58, Crude Oil at $106.08
  • Bonds: US 10 year yield at 2.593


FX Update:

  • AUD – AUD/USD declined overnight after more dovish than expected RBA minutes, dropping from 0.94 to a session low of 0.9360. However, the hunt for yield should keep the currency bid overall and the retracement should be capped ahead of the 0.9320-30 support area. To the topside, offers rebuilding at 0.9420. Cross flows were slightly AUD-negative overnight with EUR/AUD short covering pushing the pair towards the 1.45 resistance level.
  • CAD – The US dollar caught a bid and this led to a rally to 1.0880 in USD/CAD. Momentum could not be sustained up there and offers from leveraged funds capped the rally. Banks report similar things about the USD/CAD: Speculative selling interest from 1.0880 up to 1.09 and good demand from corporate names and option players from 1.0820 down to 1.08, where a barrier option is noted. A 1.0830-1.0880 consolidation ahead of the FOMC meeting is quite likely.
  • EUR – After EUR/USD dropped in yesterday’s early London session and was getting close to the 1.35 level, a short squeeze occured ahead of the European close, taking the pair to 1.3580. Flows were light overnight. Specs bought EUR/USD early, pushing it into stops above 1.3580, but momentum faded away from there. Sellers returned and the pair has settled around 1.3565 for the past couple of hours. Strong support 1.3500-15 with bids from leveraged funds and Asian sovereig names there. To the topside, resistance at 1.36 and 1.3650, but bulls would have to take out the 1.3670 level to trigger a larger short squeeze. Cross flows were mostly EUR-positive with EUR/GBP and EUR/JPY recovering slightly. However, EUR/GBP will attract good selling interest around 0.8020 and especially towards 0.8050.
  • JPY – USD/JPY rallied from a session low of 101.80 back above 102.00, driven by demand from Japanese names and specs. Stops above 102.15 look vulnerable at the moment and are likely to be targeted soon. Above there, no serious resistance until 102.25/30. To the downside, bids from macro funds and ACBs noted from 101.70 to 101.50. Plenty of risk events out of the US today, so we might see a slightly larger intraday range.


Upcoming Events:

  • 08:30 GMT – UK CPI (0.2 % MoM, 1.7 % YoY)
  • 09:00 GMT – German ZEW Economic Sentiment (35.0)
  • 12:30 GMT – US Building Permits (1.055M)
  • 12:30 GMT – US Core CPI (0.2 % MoM, 1.9 % YoY)
  • 12:30 GMT – US CPI (0.2 % MoM, 2.0 % YoY)
  • 12:30 GMT – US Housing Starts (1.036M)
  • 22:45 GMT – New Zealand Current Account (+1.40B)
  • 23:50 GMT – Japanese Trade Balance (-Y1190.0B)