Global Markets:

  • Asian stock markets: Nikkei down 1.80 %, Shanghai Composite up 0.80 %, Hang Seng lost 1.50 %, ASX declined 0.65 %
  • Commodities: Gold at $1198 (-0.75 %), Silver at $16.24 (-1.95 %), Crude Oil at $55.95 (-0.50 %)
  • Rates: US 10 year yield at 2.113, UK 10 year yield at 1.812, German 10 year yield at 0.624

News & Data:

  • China HSBC Manufacturing PMI 49.5, Expected: 49.9, Previous: 50.0
  • China FDI 0.70 %, Previous: -1.20 %
  • Japan Manufacturing PMI 52.1, Expected: 52.3, Previous: 52.0
  • Central Bank of Russia unexpectedly hiked rates from 10.5 % to 17.0 %
  • Brent Seen Falling to $50 in 2015 as OPEC Fails to Act (BBG)
  • Russia Defends Ruble With Biggest Rate Rise Since 1998 (BBG)
  • Asian Stocks Extend Drop on Oil, China While Ruble Climbs (BBG)
  • RBA: Says AUD above most estimates of its fundamental value, more depreciation likely needed to achieve balanced growth
  • RBA repeats most prudent course is period of rates stability
  • RBA notes market pricing implies some chance of easing
  • RBA board discussed factors behind market pricing on rates

Markets Update:

No surprises from the RBA overnight. The bank repeated that the most prudent course is a period of stability in rates and that the Aussie Dollar remains overvalued. There was little reaction in the AUD/USD. However, weaker than expected Chinese Manufacturing PMI sent the Aussie lower and the barrier option at 0.82 got cleared. Reuters is showing a low of 0.81997. A bounce followed, but offers remain thick ahead of 0.8250. Above there, intraday resistance noted at 0.8295, which is Friday’s high. To the downside, next key chart support eyed in the 0.8080/0.81 area.

NZD/USD traded in a 0.7720-50 range overnight. With no key data releases out of New Zealand until Thursday’s GDP release, the Kiwi Dollar is likely just to mimic the moves in AUD/USD. USD/CAD traded up to 1.1673 yesterday as Oil moved to fresh lows. The Loonie recovered somewhat overnight as WTI bounced of the $55.00 level. Chart support noted at 1.1580 and then 1.1515 (Friday’s low). Offers reported in front of the 1.17 barrier option. Strong chart resistance eyed at 1.1724 (Summer 2009 peak).

USD/JPY is extending losses heading into the London open. There is talk of semi-official bids (GPIF) around the 117.00 level, which could keep the pair supported for a while. However, a break lower seems imminent, with the next bear target being 115.50. Stops in good size reported through 116.75.

Upcoming Events:

  • 08:00 GMT – French Manufacturing PMI (48.6)
  • 08:00 GMT – French Services PMI (48.3)
  • 08:30 GMT – German Manufacturing PMI (50.4)
  • 08:30 GMT – German Services PMI (52.6)
  • 09:00 GMT – Bank of England Governor Carney speaks
  • 09:00 GMT – Italian Trade Balance (€1.97bln)
  • 09:00 GMT – Euro Zone Manufacturing PMI (50.5)
  • 09:00 GMT – Euro Zone Services PMI (51.5)
  • 09:30 GMT – UK CPI (0.1 % m/m, 1.2 % y/y)
  • 10:00 GMT – German ZEW Econ Sentiment (20.8)
  • 10:00 GMT – Euro Zone ZEW Econ Sentiment (20.1)
  • 13:30 GMT – US Building Permits (-3.4 % M7M, 1.06mln)
  • 13:30 GMT – US Housing Starts (2.1 % m/m, 1.03mln)
  • 13:30 GMT – Canadian Manufacturing Sales (-0.3 % m/m)