Global Markets:

  • Asian stock markets: Nikkei is down 0.60 %, Shanghai Composite dropped 0.40 %, Hang Seng is up 0.05 % and the ASX declined 0.40 %
  • Commodities: Gold at $1286 (+0.25 %); Silver at $19.56 (+0.40 %), Crude Oil at $93.57 (-0.35 %)
  • Rates: US 10 year yield at 2.35

News & Data:

  • Australia HIA New Home Sales -5.7 %, Previous: 1.2 %
  • Australia Private New Capital Expenditure 1.1 %, Expected: -0.3 %, Previous: -2.5 %

FX Overview:

  • AUD – AUD/USD was consolidating around 0.9335 as it headed into the Asian open. The local Capex data came in higher than expected, at 1.1 %. This led to a rally to 0.9370, where the pair ran into offers ahead of the tech resistance level at 0.9372. It then fell back to 0.9355, trading within a 5 pips range for the rest of the session. The Aussie remains well-bid and techs are signaling further gains towards 0.94.
  • CAD – USD/CAD broke below the 200 DMA in the late NY session yesterday and remained heavy since then. Dealers report that one US bank was an aggressive seller overnight, driving it from 1.0860 back to sub-1.0850. They see corporate buying interest from 1.0840 down to the big figure. Leveraged names have offers resting at 1.0885, near the 200 DMA. As to the reason why the CAD is suddenly strong, traders cite several reasons: 1) M&A flows – Burger King buying Canadian company Tim Hortons 2) large cross flows, especially in EUR/CAD, where selling was heavy and 3) CAD short covering ahead of Friday’s GDP, which is anticipated to beat expectations.
  • CHF – EUR/CHF hit the 1.2060 level yesterday and bounced off it. There was no confirmation about actual buying from the SNB, so we can only speculate if they indeed were in the market. The pressure is growing however, and some bank analysts think the bank may have to use negative rates soon should the pair get even closer to the 1.20 floor.
  • EUR – EUR/USD recovered somewhat on the Reuters story that an ECB source sees any new action from the central bank unlikely next week unless there is another decline in inflation. USD-negative month-end flows also helped. EUR/USD broke above 1.3210 and it seems we could fill the weekend gap this week after all (last Friday’s close is at 1.3238). There are several important data releases today (see Econ Calendar below), but the focus lies without doubt on Euro Zone CPI tomorrow.
  • JPY – USD/JPY remains under pressure with the pair breaking sub-103.75 again in the early Asian session. Bids reported at 103.50/60 with stops resting below. To the topside, offers now resting at 103.90/104.00 and in good size pre-104.20.

Upcoming Events:

  • 07:00 GMT – Spanish GDP (0.6 % QoQ, 1.2 % YoY)
  • 07:00 GMT – Spanish CPI (-0.2 % YoY)
  • 07:55 GMT – German Unemployment Change (-5k)
  • 07:55 GMT – German Unemployment Rate (6.7 %)
  • 08:00 GMT – Euro Zone M3 Money Supply (1.5 % YoY)
  • 09:00 GMT – Euro Zone Consumer Confidence (-10.0)
  • 12:00 GMT – German CPI (0.2 % MoM)
  • 12:30 GMT – US GDP (3.9 % QoQ)
  • 12:30 GMT – US Initial Jobless Claims (300k)
  • 12:30 GMT – US GDP Price Index (2.0 % QoQ)
  • 12:30 GMT – Canadian Current Account (-12.0B)
  • 14:00 GMT – US Pending Home Sales (0.5 % MoM)