Global Markets: 

  • Asian stock markets: Shanghai Composite up 0.65 %, Hang Seng gained 0.10 %, ASX rose 0.70 %
  • Commodities: Gold at $1220 (+0.20 %), Silver at $17.76 (-0.05 %), Crude Oil at $91.30 (+0.45 %)
  • Rates: US 10 year yield at 2.56 

News & Data: 

  • China HSBC Manufacturing PMI 50.5, Expected: 50.0, Previous: 50.2
  • Fed’s Kocherlakota: Inflation to be below target for the next few years, jobless rate overstates labor-market strength 

FX Overview: 

  • AUD – Speculators were positioning themselves for bad Chinese data today and were caught on the wrong side. The PMI number beat expectations and AUD/USD rallied to a high of 0.8914. Dealers in Asia report offers at 0.8950 and stops above, but larger selling interest is expected to be resting ahead of the 0.90 level. Europe is likely to pick up some AUD as well after the data, so AUD/USD should remain well bid. To the downside, bids noted at 0.8880, with 0.8850 now the key intraday support level.
  • CAD – USD/CAD hit a high of 1.1050 overnight after dovish comments from Bank of Canada officials. Leveraged & Real Money funds were the main buyers. The pair ran into some offers from corporate names, but they haven’t been much of an obstacle so far. Better selling interest expected ahead of the 1.11 level, as there is a barrier option resting there, but a breakout seems imminent.
  • EUR – Comments from ECB Draghi pushed the EUR/USD lower yesterday, though he didn’t say anything that wasn’t said before. The pair has been able to recover from the 1.2815 low, reaching a high of 1.2862 in Asia. A failure to breach the 1.28 support level soon would likely lead to another short squeeze up to 1.2930 resistance.
  • GBP – The focus is now back on monetary policy divergences. While the strong USD sentiment will probably prevent any rapid gains in GBP/USD, the Pound is likely to gain against other currencies as the Euro, Swiss Franc and the Yen.
  • JPY – USD/JPY fell to 108.60 overnight. Tokyo was off for a holiday, so flows were rather light. The pair looks a bit overbought and there is talk of large stops below 108.50 to 108.30, so the market might try to clear those. 

Upcoming Events: 

  • 06:45 GMT – French GDP (0.0 % QoQ)
  • 07:00 GMT – French Manufacturing PMI (47.0)
  • 07:00 GMT – French Services PMI (54.6)
  • 07:30 GMT – German Manufacturing PMI (51.2)
  • 07:30 GMT – German Services PMI (50.5)
  • 08:00 GMT – Euro Zone Manufacturing PMI (50.5)
  • 08:00 GMT – Euro Zone Services PMI (53.0)
  • 12:30 GMT – Canadian Retail Sales (0.4 % MoM)
  • 12:30 GMT – Canadian Core Retail SAles (-0.1 % MoM)
  • 13:20 GMT – FOMC Member Powell speaks
  • 13:45 GMT – US Manufacturing PMI (58.0)
  • 14:00 GMT – US Richmond Services Index
  • 18:00 GMT – FOMC Member Kocherlakota speaks