Market Brief
The EM currencies are broadly weaker against USD today, the majority of G10 grind lower as 10 year US government yields rally above 2.80% in New York. Fed officials remain supportive of policy normalization start by mid-2015. Released yesterday, the ADP employment report showed that the US economy added 191’000 new private jobs during March, slightly lower than 195K expected yet significantly higher than February’s 139K. DXY broke the 50-dma (80.221) on the upside. A good NFP reading on Friday should give further support to USD and US yields from next week.
In China, the official non-manufacturing PMI retreated from 55.00 to 54.5 in March, while HSBC/Markit composite PMI showed deeper contraction (49.3 in March versus 49.8 prev). Shanghai’s Composite dropped 0.71% at the time of writing, Hang Seng index remains flat. The weakness in China sent AUD/USD down to 0.9206. Bullish momentum fades as we walk into NFPs (Fri). Option bids are placed at 0.9200/10, if cleared will place the 200-dma (0.9138) at risk pre-NFP.
In New Zealand, NZD/USD tests 0.8544/60 (Oct 2013 high & 21-dma) on the downside, more support is eyed at 0.8502 (Mar 20th low). The MACD stepped in the red zone pre-NFPs. We see decent option bids at 0.8475 and 0.8550 for Friday expiry, waiting to be activated pre-weekend.
JPY crosses were mixed in Tokyo. USD/JPY shortly spiked to 104.07 on broad based USD demand. Bullish momentum gains pace pre-NFPs, option bids with today expiry trail above 103.85. EUR/JPY consolidates gains despite EUR-skepticism pre-ECB/Draghi, bias remains on the upside. A post-Draghi relief-rally (in case of inaction) will open the way towards the year high of 145.69. The key downside support stands at the daily Ichimoku cloud top (140.96).
EURUSD trends lower pre-ECB / Draghi today. The ECB is expected to keep the status quo (main refi rate at 0.25%, deposit rate 0.00% and marginal lending rate at 0.75%) despite the weakness in latest CPI data released on Monday. The risk of a dovish move has just started to get into EUR prices. EURUSD retreated to 1.3755 in Asia. The ECB decision and Draghi’s conference will define the course of the single currency this afternoon. Inaction from the ECB should send EUR higher. A break above the 21-dma (weekly support) will turn the short-term bias positive. EURGBP failed to clear resistance above 100-dma (0.83072) yesterday and opened below 50-dma (0.82816) in Asia. Trend and momentum indicators are solidly bearish.
The key event of the day is the ECB policy meeting and Draghi’s speech at 11:45 and 12:30 GMT respectively. The economic calendar consists of Swedish, Spanish Italian, French, German, Euro-zone and US March (Final) Services & Composite PMI, UK March Official Reserves, Euro-Zone February Retail Sales, Canadian February International Merchandise Trade, Us March 29th Initial Jobless Claims & March 22th Continuing Claims, US March ISM Non-Manufacturing Composite.
| Todays Calender | Estimates | Previous | Country / GMT |
| Currency Tech EUR/USD R 2: 1.3967 R 1: 1.3831 CURRENT: 1.3765 S 1: 1.3705 S 2: 1.3665 GBP/USD R 2: 1.6742 R 1: 1.6710 CURRENT: 1.6647 S 1: 1.6620 S 2: 1.6550 USD/JPY R 2: 105.44 R 1: 104.75 CURRENT: 103.91 S 1: 103.10 S 2: 102.72 USD/CHF R 2: 0.9156 R 1: 0.8930 CURRENT: 0.8868 S 1: 0.8800 S 2: 0.8788 | |||
| SW Mar PMI Services | 56.5 | 56.8 | SEK / 6:30 AM |
| SP Mar Markit Spain Services PMI | 53.3 | 53.7 | EUR / 7:15 AM |
| SP Mar Markit Spain Composite PMI | 53.7 | 53.8 | EUR / 7:15 AM |
| IT Mar Markit/ADACI Italy Composite PMI | - | 53.4 | EUR / 7:45 AM |
| IT Mar Markit/ADACI Italy Services PMI | 52.3 | 52.9 | EUR / 7:45 AM |
| FR Mar F Markit France Composite PMI | 51.6 | 51.6 | EUR / 7:50 AM |
| FR Mar F Markit France Services PMI | 51.4 | 51.4 | EUR / 7:50 AM |
| GE Mar F Markit/BME Germany Composite PMI | 55 | 55 | EUR / 7:55 AM |
| GE Mar F Markit Germany Services PMI | 54 | 54 | EUR / 7:55 AM |
| EC Mar F Markit Eurozone Services PMI | 52.4 | 52.4 | EUR / 8:00 AM |
| EC Mar F Markit Eurozone Composite PMI | 53.2 | 53.2 | EUR / 8:00 AM |
| UK Mar Official Reserves Changes | - | $1096M | GBP / 8:30 AM |
| EC Mar Markit EU Composite PMI | - | 54.5 | EUR / 8:30 AM |
| UK Mar Markit/CIPS UK Composite PMI | 58.1 | 58.2 | GBP / 8:30 AM |
| UK Mar Markit/CIPS UK Services PMI | 58.2 | 58.2 | GBP / 8:30 AM |
| EC Mar Markit EU Services PMI | - | 53.9 | EUR / 8:30 AM |
| UK Credit Conditions Survey | - | - | GBP / 8:30 AM |
| EC Feb Retail Sales MoM | -0.50% | 1.60% | EUR / 9:00 AM |
| EC Feb Retail Sales YoY | 0.70% | 1.30% | EUR / 9:00 AM |
| US Mar Challenger Job Cuts YoY | - | -24.40% | USD / 11:30 AM |
| ECB Announces Interest Rates | 0.25% | 0.25% | EUR / 11:45 AM |
| ECB Marginal Lending Facility | 0.75% | 0.75% | EUR / 11:45 AM |
| ECB Deposit Facility Rate | 0.00% | 0.00% | EUR / 11:45 AM |
| CA Feb Int'l Merchandise Trade | 0.20B | -0.18B | CAD / 12:30 PM |
| US Jobless Claims Annual Revisions for Data From 2009-13 | - | - | USD / 12:30 PM |
| US Revisions for Initial Jobless Claims | - | - | USD / 12:30 PM |
| US Feb Trade Balance | -$38.5B | -$39.1B | USD / 12:30 PM |
| US Mar 29th Initial Jobless Claims | 319K | 311K | USD / 12:30 PM |
| US Mar 22nd Continuing Claims | 2843K | 2823K | USD / 12:30 PM |
| US 30.mars Bloomberg Consumer Comfort | - | -31.5 | USD / 1:45 PM |
| US Mar F Markit US Services PMI | 55.7 | 55.5 | USD / 1:45 PM |
| US Mar F Markit US Composite PMI | - | 55.8 | USD / 1:45 PM |
| US Mar ISM Non-Manf. Composite | 53.5 | 51.6 | USD / 2:00 PM |