Tuesday 1st March: European Open Briefing

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Tuesday 1st March: European Open Briefing 1

Global Markets:

  • Asian stock markets: Nikkei down 0.89 %, Shanghai Composite up 0.52%, Hang Seng gained 0.47%, ASX rose 0.46 %
  • Commodities: Gold at $1245.60 (+0.54 %), Silver at $14.93 (+0.32 %), WTI Oil at $33.66 (-0.27 %), Brent Oil at $36.42 (-0.41 %)
  • Rates: US 10 year yield at 1.71, UK 10 year yield at 1.33, German 10 year yield at 0.11

News & Data:

  • Japan Nikkei Manufacturing PMI (Feb, F): 50.1 (flash 50.2)Australia House Price Index 1.6 %, Expected: 2.3 %, Previous: 2.0 %
  • Dalian Iron Ore Futures Up 4% In Light Of PBoC Easing
  • China Caixin Manufacturing PMI (Feb): 48.0 (exp 48.4 prev 48.4)
  • China Official Non-Manufacturing PMI (Feb): 52.7 (prev 53.5)
  • Chen: Paying More Attention To Price Based Monetary System -BIS Sees CNY Overvalued By Around 10% On REER Basis
  • Australia Building Approvals (MoM) Jan: -7.5% (exp -3.0% prev 9.2%) -Australia Building Approvals (YoY) Jan: -15.5% (exp -8.5% prev -2.5%)
  • Australia BoP Current Account Balance (Q$): AUD -21.1 Bln (exp AUD -20.0 Bln prev AUD -18.1 Bln)
  • Australia Net Exports Of GDP (Q4): 0.00% (exp 0.30% prev 1.50%)
  • South Korea Exports (YoY) Feb: -12.2% (exp -16.6% prev rev -18.8%) -Imports (YoY) Feb: -14.6% (exp -16.0% prev rev -20.0%)

Markets Update:

Markets open the week with a a slight tone of risk-off despite an RRR cut from China, and constructive data from the US from the positive week with Core CPI tracking higher, and PCE, the Fed’s preferred measure of inflation following suit. USDJPY is currently negative as of the weekly open, finding offers at 114.00, bringing spot down to a current level of 112.30. Key levels for the yen are the 114.80 high, and the 111.00 level, in which the BoJ was rumoured to have sold JPY to reduce the pace of the appreciation at peak deterioration of sentiment, which was also defended last week. The AUDUSD remains relatively flat, hovering around the weekly open post RBA announcement, after announcing no change, with spot currently trading at 0.7125. Resistance for the Aussie is sighted at 0.7250 with lows in the near term at 0.7080 as support. Akin to the AUD, the NZDUSD pair has been flat across the weekly open so far, currently rangebound between 0.6560 0.6750.

In regards to European FX, the EURUSD has traded lower from the range breakout seen in early February, and returned to trade in the range, with spot currently at 1,0885, offered off the back of expected increased dovishness from the ECB from Monday’s soft EU CPI release. 1.1050 is near term resistance, with support sighted at 1.0800. For cable, price action in spot has been stabilizing post-brexit referendum shocks, and extreme skew on the options side, with spot now currently trading at 1.3940, pulling back from 1.3840 lows. Highs at 1.4000 presents as short term resistance. The combination of a retracement from Brexit risk premium pricing in, and EUR downside has brought the EUR/GBP cross lower also, with highs set at 0.7930 and spot currently trading lower to 0.7800; nearest support seen at 0.7720.

Upcoming Events:

  • 08:15 BST – Europe Spanish Manufacturing PMI
  • 08:55 BST – German Unemployment Change
  • 10:00 BST – Europe Unemployment Rate 
  • 13:30 BST – Canada GDP m/m
  • 15:00 BST – US ISM Manufacturing PMI

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