Global Markets:

  • Asian stock markets: Nikkei up 0.90 %, Shanghai Composite gained 2.30 %, Hang Seng rose 1 %, ASX is 0.85 % higher
  • Commodities: Gold at $1206 (-0.20 %), Silver at $16.46 (+0.30 %), Crude Oil at $68.02 (+0.95 %)
  • Rates: US 10 year yield at 2.284, UK 10 year yield at 2.017, German 10 year yield at 0.75

News & Data:

  • Australia Retail Sales 0.4 %, Expected: 0.1 %, Previous: 1.3 %
  • Australia Trade Balance –A$1.32bln, Expected: -A$1.81bln, Previous: A$-2.24bln
  • Bank of Canada Governor Poloz: Canada GDP higher than the central bank expected but plenty of spare capacity remains
  • Poloz: Oil prices to push down inflation in the short term but 2yrs of above-potential growth and inflation expected
  • Poloz: Sees housing imbalances easing as income growth improves, "quite confident" they will moderate
  • Poloz: The gap between commodity production and manufacturing is closing
  • Poloz: Adjusting interest rates should be the the last defence against financial instability

Markets Update:

AUD/USD rallied to 0.8428 in the early Asian session, driven by better than expected retail sales and trade numbers. The trade deficit fell to A$1.32 billion vs $1.81bln expected and $2.24bln previously, while retail sales arrived at +0.4 % vs expectations of a 0.1 % increase. Momentum quickly waned though and the pair is back sub-0.84 as we are heading into the European open. Asia reports that there are offers in good size pre-0.8450. Support now seen at 0.8475 and then 0.8420.

EUR/USD is still holding above the 1.23 level, but looking at price action, it’s very likely we’ll see a break lower ahead of the ECB press conference at 1330 GMT. Stops reported through 1.2290, as well as system fund stops through 1.2280. Next chart support seen around 1.2260, which was the August 2012 low after which the pair rallied to 1.31.

USD/JPY hit a high of 119.93 on demand from local names. Asia notes that a sovereign name was a good seller overnight and there are offers in decent size ahead of the 120.00 level. Intraday support at 119.60 and then 119.25.

USD/CAD declined to 1.1350 after the Bank of Canada statement was slightly more hawkish than expected. Key chart support now seen at 1.1310 and a break below would likely trigger some position covering from short-term specs. Oil prices have stabilized somewhat, after two very volatile trading sessions on Monday.

Upcoming Events:

  • 12:00 GMT – Bank of England Rate Decision (0.50 %, 375bln QE)
  • 12:45 GMT – ECB Rate Decision (0.05 %)
  • 13:30 GMT – US Initial Jobless Claims (297k)
  • 13:30 GMT – ECB Press Conference
  • 15:00 GMT – Canadian Ivey PMI (53.2)