Global Markets: 

  • Asian stock markets: Nikkei down 1 %, Shanghai Composite lost 0.10 %, Hang Seng declined 1.20 %, ASX gained 0.20%
  • Commodities: Gold at $1218 (-0.05 %), Silver at $17.55 (-0.10 %), Crude Oil at $94.60 (+0.05 %)
  • Rates: US 10 year yield at 2.49 

News & Data: 

  • China HSBC Manufacturing PMI 50.2, Expected: 50.5, Previous: 50.5
  • Japan Unemployment Rate 3.5 %, Expected: 3.8 %, Previous: 3.8 %
  • Japan Industrial Production -1.5 %, Expected: +0.2 %, Previous: +0.4 %
  • Japan Household Spending -4.7 %, Expected: -3.8 %, Previous: -5.9 %
  • Japan Retail Sales 1.2 %, Expected: 0.3 %, Previous: 0.5 %
  • New Zealand ANZ Business Confidence 13.4 %, Previous: 24.4 %
  • Asutralia Private Sector Credit 0.4 %, Expected: 0.4 %, Previous: 0.4 %
  • UK GfK Consumer Confidence -1 vs 0 expected

 

FX Overview: 

The Chinese HSBC Manufacturing PMI came in lower than expected, but there was not much of a reaction in the market. The focus remains on the on-going protests in Hong Kong and how the Chinese government will react should they continue, as well as the situation in Catalonia, where the MAS party is calling for an independence referendum. While the situation in Ukraine has calmed down somewhat, geopolitical risks remain high overall.

AUD/USD declined in the early Asian session amid selling from leveraged funds. It hit a low of 0.8690 ahead of the PMI release and bounced from there, steadily rising to 0.8667 over the next few hours. Dealers noted AUD-supportive month-end flows and short covering from specs after the pair failed to drop on the Chinese econ data. Better offers expected at 0.8790-0.88 and larger stops resting above the big figure.

NZD/USD rallied as well, hitting a high of 0.7826 as some were caught short at low levels after the RBNZ news yesterday. The market is quite short NZD, so there is scope for a further squeeze. Solid resistance noted at 0.7880, while the key level to the downside remains 0.77. The Canadian Dollar failed to gain much on the USD weakness, with USD/CAD only reaching a low of 1.1133 overnight. There is talk of solid bids at 1.1120, but also of stops resting beneath the level.

Monday was a quiet day for the EUR/USD, but perhaps it will be more lively today with the Euro Zone inflation and unemployment figures. Asia reported bids at 1.2650-60, while offers from Asian funds resting at 1.2710. Intraday stops above 1.2720, but a break above 1.2750 would be needed to trigger a larger squeeze. Meanwhile, GBP/USD has been well-bid into the lower 1.62 support area and there is a good chance for a bounce towards 1.6330, especially if UK data later today should beat expectations.

 

Upcoming Events: 

  • 06:00 GMT – German Retail Sales (0.5 % MoM, -0.2 % YoY)
  • 07:55 GMT – German Unemployment Change (-2k)
  • 07:55 GMT – German Unemployment Rate (6.7 %)
  • 08:30 GMT – UK GDP (0.8 % QoQ, 3.2 % YoY)
  • 09:00 GMT – Euro Zone CPI (0.3 % YoY)
  • 09:00 GMT – Euro Zone Unemployment Rate (11.5 %)
  • 12:30 GMT – Canadian GDP
  • 13:45 GMT – Chicago PMI (62.0)
  • 14:00 GMT – US CB Consumer Confidence (92.5)