Global Markets: 

  • Asian stock markets: Nikkei down 0.85 %, Shanghai Composite dropped 1.50 %, Hang Seng fell 1.30 % and ASX declined 1.45
  • Commodities: Gold at $1214 (-0.20 %), Silver at $17.57 (-1.50 %), Crude Oil at $91.38 (-0.30 %)
  • Rates: US 10 year yield at 2.56 

News & Data:  New Zealand Westpac Consumer Confidence 116.7 vs 121.2 previous

FX Overview: 

USD weakness was the main theme overnight. The Euro gained on comments from ECB members over the weekend, which indicated that QE is not coming soon. EUR/USD rose to a high of 1.2767 and is likely to remain bid in the near-term. 1.2930 is now the key short-term resistance level and a break above would pave the way for another 1.2980 test.

The commodity currencies gained slightly, led by the Kiwi. However, precious metals failed to bounce despite the retracement in the US Dollar. Silver extended losses as traders continued to cover long position after the break of the 18.20 support level on Friday. It’s not looking good for Gold either and expectations of further gains in US yields could see a break of the $1200 level soon. 

CFTC Positioning: 

  • EUR shorts 137k vs 158k short prior week
  • GBP shorts 6k vs 27k long prior week
  • JPY shorts 83k vs 101k short prior week
  • AUD longs 22k vs 41k long prior week
  • CAD longs 7.5k vs 11.6k long prior week
  • CHF shorts 11k vs 14k short prior week

The Week Ahead: 

Today, the US will release it’s Existing Home Sales data, expected to arrive at 5.2 million. ECB President Draghi will speak in the European Parliament, beginning at 1400 London time. Draghi will present the ECB’s perspective on economic and monetary developments before entering in a discussion with Members, also covering 2 specific issues: Targeted Longer-Term Refinancing Operations (TLTROs) and the monetary transmission mechanism in the euro area and the consequences of persistent inflation differentials across euro-area countries for the conduct of a common monetary policy. Shortly later, FOMC member Dudley will be speaking in New York.

On Tuesday, we will see a series of Manufacturing PMI data, starting with China at 0145 GMT. French, German and Euro Zone PMIs will be released between 0645 and 0800 GMT. In the US session, Canada will release it’s Retail Sales figures and we’ll get the US Markit Manufacturing PMI.

The following day, Markit will publish the Japanese Manufacturing PMI and in the European session, we will get the German IFO numbers. In the US session, the US will release New Home Sales and the two FED members Mester and Evans will be speaking.

On Thursday, it will likely be a quiet European session with not Tier 1 data. Later in the day, we’ll see the US Durable Goods Orders data, with markets expecting a decline of 18 % and a gain of +0.70 % when excluding Transportation, as well as the US Markit Services PMI. Bank of England Governor Carney will be speaking in Wales in the afternoon (European time) and FED member Lockhart will deliver a speech in Jackson, Mississippi.

Finally, on Friday, Japan will release it’s inflation figures and the US it’s Core PCE and GDP data. 

Upcoming Events: 

  • 13:00 GMT – ECB President Draghi speaks
  • 14:00 GMT – US Existing Home Sales (5.20M, 1.0 % MoM)
  • 14:00 GMT – Euro Zone Consumer Confidence (-10.5)
  • 14:05 GMT – FOMC Member Dudley speaks