Global Markets: 

  • RBNZ Interest Rate Decision 3.50 % vs 3.50 % f/c
  • Japan Manufacturing PMI 50.8 vs 51.9 f/c
  • Chinese HSBC Manufacturing PMI 52.0 vs 51.0 f/c
  • New Zealand Trade Balance MoM 247M vs 150M f/c
  • New Zealand Trade Balance YoY 1200M vs 1150M f/c
  • Japan Trade Balance -822B vs -643B f/c
  • Japan Exports YoY -2.0 % vs +1.0 % f/c
  • Japan Imports YoY 8.4 % vs 8.4 % f/c
  • RBNZ says the economy is still adjusting to policy tightening, says key rate will need to move towards more neutral level
  • RBNZ says pace of OCR hikes will depend on impact of tightening, currency is yet to adjust to commodity price declines
  • RBNZ says New Zealand Dolalr level is unjustified, unsustainable
  • Japan PM Abe: FY15 budget for ending deflation, effects of abenomics to spread to regions
  • Asian stock markets: Nikkei down 0.50 %, Shanghai Composite gained 0.80 %, Hang Seng is up 0.30 % and the ASX rose 0.10 %
  • Commodities: Gold down 0.50 % at $1297, Silver dropped 0.80 % to $20.83, Crude Oil unchanged on the day at $103.10
  • Rates: US 10 year yield stands at 2.46

FX Update: 

  • AUD – AUD/USD rallied after the Chinese PMI figure came in better than expected, taking the pair to a session high of 0.9470. The pair then retraced those gains and is consolidating around 0.9445 as we are heading towards the European open. Dealers in Asia note selling interest ahead of 0.95 remains decent and that they expect offers from sovereign names to appear near the big figure. Intraday players have burned their fingers many times shorting the Aussie as we got plenty of mini-squeezes recently, but the longer-term names seem still quite bearish and happy to sell into any larger rally. Strong cross flows overnight with lots of short covering in AUD/NZD. The pair rallied from 1.0850 to 1.1010 and the next resistance level to keep an eye on is 1.1085.
  • CAD – Mix of corporate & leveraged demand helped to keep losses in USD/CAD limited yesterday, with the 1.0710 support level holding. There is not much of a catalyst that could lead to a breakout in the pair, so it will likely be a 1.0710-1.0750 range for the rest of the week. Aside from the already mentioned bids from 1.0710 down to the big figure, dealers now say that offers are scattered and nothing that stands out at the moment.
  • EUR – Bit of a battle here for the 1.3450 level and talk is that Chinese sovereign names are defending the barrier option there. Offers building at 1.3480, but better selling interest seen towards 1.3520. Stops accumulating above the big figure, through 1.3505, and to the downside sub-1.3440. Plenty of PMI data ahead, let’s hope they’ll move the Euro a bit.
  • GBP – The Pound declined after the Bank of England Minutes & the speech of BoE Governor Carney. London reported good buying from Middle East sovereign names in the early NY session and some short-term names then booked profits pre-1.7020. We have the UK Retail Sales release bit later, but the focus remains on tomorrow’s GDP release.
  • JPY – Not much to report about USD/JPY. Exporter and US names have offers at 101.60 and importers have bids at 101.30.
  • NZD – The RBNZ hiked rates by 25 bps, but signaled a pause in further hikes. The bank also used more aggressive language about the on-going Kiwi strength, which some interpreted as a warning of possible direct intervention. System funds were sellers onc we broke sub-0.86 and the pair is now consolidating around 0.8580. 

Upcoming Events: 

  • 07:00 GMT – French Manufacturing PMI (48.1)
  • 07:00 GMT – French Services PMI (48.4)
  • 07:30 GMT – German Manufacturing PMI (52.0)
  • 07:30 GMT – German Services PMI (54.5)
  • 08:00 GMT – Euro Zone Manufacturing PMI (51.7)
  • 08:00 GMT – Euro Zone Services PMI (52.7)
  • 08:00 GMT – Italian Retail Sales (0.4 % MoM)
  • 08:30 GMT – UK Retail Sales (0.3 % MoM, 3.9 % YoY)
  • 12:30 GMT – US Initial Jobless Claims (308k)
  • 13:45 GMT – US Manufacturing PMI (57.5)
  • 14:00 GMT – US New Home Sales (479k)