Global Markets: 

  • Asian stock markets: Nikkei down 0.50 %, Shanghai Composite lost 0.90 %, Hang Seng declined 0.25 %, ASX fell 0.30 %
  • Commodities: Gold at $1243 (-0.20 %), Silver at $17.20 (-0.20 %), Crude Oil at $80.40 (-0.15 %)
  • Rates: US 10 year yield at 2.213, German 10 year yield at 0.863, UK 10 year yield at 2.20

News & Data: 

  • New Zealand CPI QoQ 0.3 %, Expected: 0.5 %, Previous: 0.3 %
  • New Zealand CPI YoY 1.0 %, Expected: 1.3 %, Previous: 1.6 %
  • Australia NAB Business Confidence 6, Previous: 6
  • China HSBC Manufacturing PMI 50.4, Expected: 50.3, Previous: 50.2
  • Japan Manufacturing PMI 52.8, Expected: 52.1, Previous: 51.7

FX Overview: 

US equity indices closed lower yesterday after shootings in the Canadian parliament building in Ottawa led to bit of a “risk-off” sentiment. Asian stock markets are all down this morning, despite the slightly better than expected Chinese econ data. In precious metals, the failure to hold above $1250 caused some fresh selling in Gold from leveraged names. Price fell to $1241 in Asia, while Silver seems to be heading for another test of the $17.00 level. Crude Oil got hit again yesterday, but was able to hold above the $80 level and closed the day around $80.35.

Weak inflation data out of New Zealand was the main theme overnight. NZD/USD fell from 0.7930 to a low of 0.7830. As the RBNZ is currently in “inflation watch” mode and with inflation being at 1.0 %, it is highly unlikely the bank will raise rates for quite some time. Further, the RBNZ is likely to be increasingly dovish in their next OCR review. Most banks see a later rate hike and Australian bank ANZ has moved it’s forecast for the next RBNZ rate hike from March 2015 to December 2015. In the crosses, AUD/NZD rallied to a high of 1.1180, while EUR/NZD shorts got squeezed. Dealers saw demand from macro names for topside calls in AUD/NZD from 2 weeks to a month with the most common strike at 1.12.

USD/JPY hit a high of 107.35 amid demand from Japanese names at the Tokyo open. Offers at 107.40 remain solid though and capped the topside once again. To the downside, bids from Japanese real money funds and importers reported at 106.80 with stops resting through 106.70/75. Meanwhile, EUR/USD and GBP/USD were both stuck in a 20 pips range, nothing to report here.

Upcoming Events: 

  • 07:00 GMT – French Manufacturing PMI (48.5)
  • 07:00 GMT – French Services PMI (48.2)
  • 07:30 GMT – German Manufacturing PMI (49.5)
  • 07:30 GMT – German Services (55.0)
  • 08:00 GMT – Euro Zone Manufacturing PMI (49.9)
  • 08:00 GMT – Euro Zone Services PMI (52.0)
  • 08:30 GMT – UK Retail Sales (-0.1 % MoM, 2.8 % YoY)
  • 08:30 GMT – UK Core Retail Sales (-0.2 % MoM, 3.4 % YoY)
  • 12:30 GMT – US Initial Jobless Claims (280k)
  • 13:45 GMT – US Manufacturing PMI (57.0)
  • 21:45 GMT – New Zealand Trade Balance (-620mln)