Market Brief
The week starts with stronger USD across the board amid better-than-expected US GDP in 4Q second reading released on Friday. According to data, the US economy grew 2.2% q/q (vs. 2.2% exp. & 2.6% last), while the core PCE remained stable at 1.1% q/q in line with market expectations. The week ahead will likely see limited sell-off in USD as trader will be in wait-and-see mode before February labor data. The nonfarm payrolls are expected at 235K (verse the strong 257K reading a month ago) and the unemployment rate is seen improved at 5.6% (vs. 5.7% prev.). The progress in earning data will be under close watch to judge how fast the slack in US jobs market is collapsing, an important input in speculations for the timing of the first Fed rate hike expected by the second half of the year. WSJ reports twice higher rate expectations based on futures market pricings.
In China, the PBOC cut the 1-year deposit and lending rates by 25 basis points to 2.50% and 5.35% respectively, the deposit rate ceiling has been stretched from 1.2 to 1.3 times, perceived as PBOC’s will toward a more market-oriented approach. Measures aim to boost economic activity, as the State Information State said to expect the growth to slowdown to 7% in Q1. USD/CNY advanced to 6.2779, the building CNY-negative pressures will likely continue pushing the pair toward 6.30, last seen on Q4, 2012. Option bids trail above 6.25 for today expiry.
AUD/USD crossed below its 21-dma (0.7794) support on expectations that the RBA will also lower its cash rate target by 25 basis points to 3% at policy meeting tomorrow. Data showed the commodity prices continue sliding lower (-20.6% on year to February), reinforcing the bearish weekly start on the Aussie complex. Selling pressures should dominate pre-RBA.
USD/JPY opened the week better bid as capital spending slowed significantly to 2.8% y/y in 4Q (vs. 4.0% exp. & 5.5% last), therefore reviving speculations that BoJ may proceed with additional monetary stimulus in close future. The 21-dma is now ready to break above 50-dma, technically pushing USD/JPY toward short-term bull bias. Large vanilla bids are placed at above 119.00/50 area, while barriers at 120+ should be cleared for sustainable advance to February’s double top at 120.47/48. EUR/JPY trade in tight range of 133.65/134.00.
EUR/USD consolidated weakness at 1.1160/92 at week open. Failure to break above Fibonacci 23.6% (1.1445) on Dec’14 –Feb’15 drop weighs on EUR-bull appetite. The MACD (12, 26) will step in the red zone for a daily close below 1.1175 (MACD pivot). The key support stands at 1.1098 (Jan 26th low), if broken should see a quick advance toward 1.10 psychological support. Option barriers trail down from 1.12, while stops are presumed below 1.10. Besides February final manufacturing PMI across the euro area, the aggregate euro-zone February CPI estimate is key EUR-data today. The headline inflation is seen at -0.5% y/y, with core CPI stable at 0.6% y/y.
Today’s economic calendar : February PMI Manufacturing data from Sweden, Norway, Spain, Switzerland, Italy, France, Germany, euro-zone, UK, US and Canada, Swedish December Wages Non-Manual Workers y/y, Italian January (Prelim) & 4Q Unemployment Rate, UK January Consumer Credit, Net Lending Sec. on Dwellings, Mortgage Approvals and M4 Money Supply, euro-zone January Unemployment Rate, Euro-zone February CPI Estimate & (Prelim) Core CPI y/y, Italian 2014 GDP Annual y/y and Deficit to GDP, Canadian 4Q Current Account Balance, US January Personal Income & Spending, PCE Deflator and Core m/m & y/y, US January Construction Spending, US Feb ISM Manufacturing and Prices Paid and Italian February New Car Registrations y/y and Budget Balance ytd.
| Today's Calendar | Estimates | Previous | Country / GMT |
|---|---|---|---|
| SW Feb Swedbank/Silf PMI Manufacturing | 55 | 55.1 | SEK / 07:30 |
| NO Feb Manufacturing PMI | 51.5 | 51.9 | NOK / 08:00 |
| SZ SNB Sight Deposits | - | - | CHF / 08:00 |
| SP Feb Markit Spain Manufacturing PMI | 55.1 | 54.7 | EUR / 08:15 |
| SZ Feb PMI Manufacturing | 47.3 | 48.2 | CHF / 08:30 |
| SW Dec Wages Non-Manual Workers YoY | - | 2.60% | SEK / 08:30 |
| IT Feb Markit/ADACI Italy Manufacturing PMI | 50.1 | 49.9 | EUR / 08:45 |
| FR Feb F Markit France Manufacturing PMI | 47.7 | 47.7 | EUR / 08:50 |
| GE Feb F Markit/BME Germany Manufacturing PMI | 50.9 | 50.9 | EUR / 08:55 |
| NO Jan Credit Indicator Growth YoY | 5.50% | 5.40% | NOK / 09:00 |
| EC Feb F Markit Eurozone Manufacturing PMI | 51.1 | 51.1 | EUR / 09:00 |
| GE Feb CPI Brandenburg MoM | - | -1.20% | EUR / 09:00 |
| GE Feb CPI Brandenburg YoY | - | -0.60% | EUR / 09:00 |
| IT Jan P Unemployment Rate | 12.90% | 12.90% | EUR / 09:00 |
| IT 4Q Unemployment Rate Quarterly | 12.90% | 12.80% | EUR / 09:00 |
| UK Jan Net Consumer Credit | 0.9B | 0.6B | GBP / 09:30 |
| UK Jan Net Lending Sec. on Dwellings | 1.7B | 1.6B | GBP / 09:30 |
| UK Jan Mortgage Approvals | 61.0K | 60.3K | GBP / 09:30 |
| UK Jan Money Supply M4 MoM | - | 0.10% | GBP / 09:30 |
| UK Jan M4 Money Supply YoY | - | -1.10% | GBP / 09:30 |
| UK Jan M4 Ex IOFCs 3M Annualised | - | 5.00% | GBP / 09:30 |
| UK Feb Markit UK PMI Manufacturing SA | 53.3 | 53 | GBP / 09:30 |
| EC Jan Unemployment Rate | 11.40% | 11.40% | EUR / 10:00 |
| EC Feb CPI Estimate YoY | -0.50% | - | EUR / 10:00 |
| IT 2014 GDP Annual YoY | -0.40% | -1.90% | EUR / 10:00 |
| IT 2014 Deficit to GDP | - | 3.00% | EUR / 10:00 |
| EC Feb A CPI Core YoY | 0.60% | 0.60% | EUR / 10:00 |
| CA 4Q Current Account Balance | -$12.5B | -$8.4B | CAD / 13:30 |
| US Jan Personal Income | 0.40% | 0.30% | USD / 13:30 |
| US Jan Personal Spending | -0.10% | -0.30% | USD / 13:30 |
| US Jan PCE Deflator MoM | -0.50% | -0.20% | USD / 13:30 |
| US Jan PCE Deflator YoY | 0.20% | 0.70% | USD / 13:30 |
| US Jan PCE Core MoM | 0.10% | 0.00% | USD / 13:30 |
| US Jan PCE Core YoY | 1.30% | 1.30% | USD / 13:30 |
| CA Feb RBC Canadian Manufacturing PMI | - | 51 | CAD / 14:30 |
| US Feb F Markit US Manufacturing PMI | 54.3 | 54.3 | USD / 14:45 |
| US Jan Construction Spending MoM | 0.30% | 0.40% | USD / 15:00 |
| US Feb ISM Manufacturing | 53 | 53.5 | USD / 15:00 |
| US Feb ISM Prices Paid | 37 | 35 | USD / 15:00 |
| IT Feb New Car Registrations YoY | - | 10.90% | EUR / 17:00 |
| IT Feb Budget Balance | - | 3.4B | EUR / 17:00 |
EUR/USD
R 2: 1.1445
R 1: 1.1245
CURRENT: 1.1181
S 1: 1.1098
S 2: 1.1000
GBP/USD
R 2: 1.5620
R 1: 1.5552
CURRENT: 1.5400
S 1: 1.5319
S 2: 1.5197
USD/JPY
R 2: 121.85
R 1: 120.48
CURRENT: 119.81
S 1: 118.90
S 2: 118.18
USD/CHF
R 2: 0.9831
R 1: 0.9595
CURRENT: 0.9551
S 1: 0.9451
S 2: 0.9374