Global Markets:

  • Asian stock markets: Nikkei up 1.15 %, Shanghai Composite gained 1.85 %, Hang Seng rose 0.40 %, ASX rallied 1 %
  • Commodities: Gold at $1153 (+0.25 %), Silver at $15.46 (+0.65 %), WTI Oil at $48.42 (+0.30 %), Brent Oil at $58.00 (+0.20 %)
  • Rates: US 10 year yield at 2.103, UK 10 year yield at 1.795, German 10 year yield at 0.207

News & Data:

  • Australia Employment Change 15.6k, Expected: 15.0k, Previous: -14.6k
  • Australia Unemployment Rate 6.3 %, Expected: 6.3 %, Previous: 6.4 %
  • Australia Participation Rate 64.6 %, Expected: 64.8 %, Previous: 64.7 %
  • Japan Industry Activity Index 1.4 %, Expected: 0.6 %, Previous: 0.0 %
  • Japan Household Confidence 40.7, Expected: 39.9, Previous: 39.1
  • UK House Price Balance 14.0 %, Expected: 6.0 %, Previous: 7.0 %
  • Bank Of Korea Cuts Key Interest Rate To 1.75% From 2%
  • PBOC Fixes Yuan At 6.1617 (previous 6.1597)
  • Bank Of Mexico Deputy Governor: Still Deciding If Should Hike Pre Or Post Fed Hike — RTRS
  • Dollar Index Reaches 100, First Time Since 2003

RBNZ Monetary Policy Statement Highlights:

  • RBNZ left official cash rate unchanged at 3.5 %
  • Global financial conditions remain very accommodative
  • Trading partner growth in 2015 is expected to continue at a similar pace to 2014
  • Growth remains robust in us, but has slowed in China
  • Domestic economy remains strong
  • Fall in oil prices has increased purchasing power and lowered cost of doing business
  • New Zealand Dollar remains unjustifiably high and unsustainable
  • A substantial downward correction is needed to put New Zealand’s external accounts on a more sustainable footing
  • Annual CPI expected to fall to 0 % in March and remain low over 2015
  • Future rate adjustments, either up or down, will depend on emerging flow of economic data

Markets Update:

EUR/USD fell briefly below 1.05 in the APAC session amid steady supply from leveraged names and momentum funds. The next support levels to keep an eye on are 1.04, 1.0333 (January 2003 low) and then 1.0204 (July 2002 high). It is difficult to sell the EUR after it has already fallen that much, but trying to catch a bottom doesn't make much sense either as the EUR/USD continues to be in a free fall. GBP/USD closed the day below 1.50 and a test of the 2013 low at 1.48 is just a matter of time. The GBP weakness helped to lift EUR/GBP off the 0.7010 level, but the bounce has been rather weak and it seems very likely we’ll see the pair trading with a 0.69 handle soon. Meanwhile, USD/JPY has been unusually quiet. The pair briefly traded above 121.60 in Asia, but failed to sustain momentum and fell back to 121.40. Overall, flows are mixed according to dealers and traders seem focused on the other major currency pairs.

NZD was the best performing currency overnight after the RBNZ was less dovish than expected in their statement. While they included the usual statement about the NZD being overvalued, they were quite upbeat on the economy and rate stability seems likely in the near-term. NZD/USD rallied from 0.7180 to a high of 0.7330 and AUD/NZD dropped back below sub-1.04. Key support seen in the 1.0300-20 area.

Upcoming Events:

  • 07:00 GMT – German CPI (0.9 % m/m, 0.1 % y/y)
  • 07:00 GMT – German HICP (1.0 % m/m, -0.1 % y/y)
  • 07:45 GMT – French CPI (0.6 % m/m)
  • 07:45 GMT – French HICP (0.6 % m/m, -0.4 % y/y)
  • 08:00 GMT – Spanish CPI (0.2 % m/m)
  • 08.00 GMT – Spanish HICP (0.1 % m/m, -1.2 % y/y)
  • 08:30 GMT – Swedish Unemployment Rate (8.2 %)
  • 09:30 GMT – UK Trade Balance (-£9.70bln)
  • 10:00 GMT – Bundesbank President Weidmann speaks
  • 10:00 GMT – Euro Zone Industrial Production (0.2 % m/m, 0.1 % y/y)
  • 12:30 GMT – US Initial Jobless Claims (305k)
  • 12:30 GMT – US Core Retail Sales (0.5 % m/m)
  • 12:30 GMT – US Retail Sales (0.3 % m/m)
  • 12:45 GMT – Bank of England Governor Carney speaks
  • 14:00 GMT – US Business Inventories (0.1 % m/m)