Global Markets:

  • Asian stock markets: Nikkei up 0.10 %, Shanghai Composite and Hang Seng down 0.50 %, ASX lost 0.10 %
  • Commodities: Gold at $1163 (-0.40 %), Silver at $15.84 (-0.60 %), Crude Oil at $77.15 (-0.05 %)
  • Rates: US 10 year yield at 2.332, UK 10 year yield at 2.229, German 10 year yield at 0.812

News & Data:

  • New Zealand Employment Change 0.8 %, Expected: 0.6 %, Previous: 0.4 %
  • New Zealand Unemployment Rate 5.4 %, Expected: 5.5 %, Previous: 5.6 %
  • New Zealand Participation Rate 69 %, Expected: 69 %, Previous: 68.90 %
  • Australia AIG Services Index 43.6, Previous: 45.4
  • China HSBC Services PMI 52.9, Previous: 53.5
  • BOJ Governor Kuroda says BOJ will continue easing until 2% inflation stable; easing has been producing intended effects so far
  • BOJ Governor Kuroda says no central bank can hit 2% inflation in exactly in 2 years; aims to achieve 2% CPI soonest in about 2 year horizon
  • BOJ Governor Kuroda says natural to act if downside risks to prices substantial; BOJ’s recent action displays its unwavering commitment
  • BOJ Governor Kuroda: Don’t think there is a limit for BOJ steps
  • BOJ Governor Kuroda: Hard to address if market loses faith in Japan’s finances
  • BOJ Governor Kuroda: BOJ easing not targeted at FX rates
  • Japan Prime Minister Shinzo Abe: Need to consider how high energy prices affect economy

Markets Update:

Asian stock markets are having a mixed session, with most of the major indices down on the day, expect the Nikkei. Commodities continue to weaken with Gold and Silver heading towards the Friday lows. Crude Oil fell sharply yesterday on the news that Saudi-Arabia has cut oil prices for the US and hit a fresh multi-year low at $75.88.

In FX, EUR/USD gained as Reuters ran a story that many NCB governors at the ECB are unhappy with President Draghi and will challenge his leadership style. According to Reuters’ sources, at least 7 and up to 10 council members of 24 are against QE and said “it would be politically explosive for Draghi to try to force QE”. The pair traded in a 1.2540-65 range in Asia. Bids reported ahead of the 1.25 level, while offers in decent size resting at 1.2580. Note that there are €3.4 billion worth of options expiring at 1.25 today.

In AUD/USD, the 0.8640/50 support area held and we are back in the middle of the range (0.8640-0.89). It seems the pair might be stuck in this range until NFP, but the employment data tomorrow will likely bring some volatility. AUD/USD opened around 0.8730 in Asia, rallied to 0.8760 and is now back near the opening levels. Cross flows were mixed, with leveraged names buying AUD/JPY, but AUD/NZD selling and EUR/AUD buying noted.

The Kiwi Dollar gained after better than expected employment data, with the NZD/USD hitting a high of 0.7840. The next key resistance level to watch is 0.7880. Meanwhile, USD/CAD is consolidating around 1.14 as the Loonie remains under pressure amid weak Oil prices. Key s/t support seen at 1.1340, while resistance lies at 1.1440.

Upcoming Events:

  • 08:15 GMT – Swiss CPI (0.1 % MoM, -0.1 % YoY)
  • 08:15 GMT – Spanish Services PMI (56.0)
  • 08:45 GMT – Italian Services PMI (49.2)
  • 08:50 GMT – French Services PMI (48.1)
  • 08:55 GMT – German Services PMI (54.8)
  • 09:00 GMT – Euro Zone Services PMI (52.4)
  • 09:30 GMT – UK Services PMI (58.5)
  • 10:00 GMT – Euro Zone Retail Sales (-0.8 % MoM, +1.2 % YoY)
  • 13:15 GMT – US ADP Nonfarm Employment Change (220k)
  • 14:00 GMT – US Services PMI
  • 15:00 GMT – US ISM Non-Manufacturing PMI (58.0)