Market Brief
As widely expected, the RBNZ maintained its official cash rate unchanged at 3.50% and revised lower its growth and inflation forecasts. The NZD is still seen overvalued, yet satisfactory at current levels. The kiwi lost 18.5% over the past 8 months against the US dollar. NZD/USD rebounded from 0.7200 to 0.7383 post-RBNZ. Sentiment should turn positive should 0.7385/0.7400 barriers are cleared before the week close. The negative impacts of baseless news on Fonterra’s baby milk contamination continues weighing on dairy exports.
The USD appetite continues dominating the FX markets. The US 10-Year yields finds support above 2%, while the DXY index tests 100 for the first time since March 2003. The rising risk is the Fed keeping its “patient” rhetoric at next week’s meeting. Then the relief rally should immediately reverse short-term dynamics in G10, high-beta and EM currencies that have been struggling at deepening oversold conditions since last week’s NFPs.
EUR/USD could hardly fall faster after Mario Draghi’s (unsurprising) comments on the QE. The pair hit 1.0495 overnight as buyers are obviously outweighed by fundamental and speculative shorts. With the broad target set to parity, traders should continue find opportunities in rallies to strengthen their short-EUR/USD positioning.
As suspected, 0.70 support remains challenging for EUR/GBP-bears. As the GBP-negative sentiment spills over the market on pre-election talks, GBP/USD eases to 1.4893, lowest since Jul’13. The bias remains on the downside with vanilla puts trailing below 1.4950/80 area. The key support stands at 1.4814 (Jul 9th 2013 low).
USD/CAD tested fresh 6-year highs (1.2799) as the WTI crude legged down to $47.33 in New York yesterday. The MACD (12, 26) stepped in bullish zone suggesting fresh interest in USD/CAD longs. Vanilla calls trail above 1.2650/1.27 and should give support before Friday’s labor data. The expectations are soft, therefore keeping the divergent BoC/Fed bets in charge for further loonie weakness verse USD.
In Brazil, the BCB minutes are due today and investors focus on bank’s comments about the accelerating consumer prices. The minutes will likely fall short of BCB hawks, while the central bank will doubtlessly leave the door open for further Selic rate hike given that it has little option other than conducting an aggressive, tight monetary policy to make sure to not lose control over the inflation diverging significantly from the BCB’s target. Indeed, the concerns on Rousseff’s ability to restore a fiscal discipline, the substantial depreciation in BRL combined to hawkish Fed expectations require tighter monetary policy, as the economic slowdown remains a major issue. There is the dilemma. The Congress postponed vote on the budget bill to March 17th.
Today traders focus on German, French and Spanish February Final CPI m/m & y/y, Swedish February Unemployment Rate, UK January Trade Balance, Euro-Zone January Industrial Production m/m & y/y, Canadian 4Q Capacity Utilization Rate and February Teranet/National Bank HPI m/m & y/y, Canadian January New Housing Price Index y/y, US February Retail Sales m/m, US March 7th Initial Jobless & February 28th Continuing Claims, Us February Import Price Index m/m & y/y, US January Business Inventories, US 4Q Household Change in Net Worth and US Monthly Budget Statement.
| Today's Calendar | Estimates | Previous | Country / GMT |
|---|---|---|---|
| GE Feb F CPI MoM | 0.90% | 0.90% | EUR / 07:00 |
| GE Feb F CPI YoY | 0.10% | 0.10% | EUR / 07:00 |
| GE Feb F CPI EU Harmonized MoM | 1.00% | 1.00% | EUR / 07:00 |
| GE Feb F CPI EU Harmonized YoY | -0.10% | -0.10% | EUR / 07:00 |
| FR Feb CPI EU Harmonized MoM | 0.60% | -1.10% | EUR / 07:45 |
| FR Feb CPI EU Harmonized YoY | -0.40% | -0.40% | EUR / 07:45 |
| FR Feb CPI MoM | 0.60% | -1.00% | EUR / 07:45 |
| FR Feb CPI YoY | -0.40% | -0.40% | EUR / 07:45 |
| FR Feb CPI Ex-Tobacco Index | 125.28 | 124.53 | EUR / 07:45 |
| SP Feb CPI EU Harmonised MoM | 0.10% | -2.20% | EUR / 08:00 |
| SP Feb F CPI EU Harmonised YoY | -1.20% | -1.20% | EUR / 08:00 |
| SP Feb CPI MoM | 0.20% | -1.60% | EUR / 08:00 |
| SP Feb F CPI YoY | -1.10% | -1.10% | EUR / 08:00 |
| SP Feb CPI Core MoM | 0.00% | -1.50% | EUR / 08:00 |
| SP Feb CPI Core YoY | 0.30% | 0.20% | EUR / 08:00 |
| SW Feb Unemployment Rate | 8.30% | 8.40% | SEK / 08:30 |
| SW Feb Unemployment Rate Trend | - | 7.80% | SEK / 08:30 |
| SW Feb Unemployment Rate SA | 7.80% | 7.90% | SEK / 08:30 |
| NO Statistics Norway Releases Outlook Survey | - | - | NOK / 09:00 |
| UK Jan Visible Trade Balance GBP/Mn | -£9650 | -£10154 | GBP / 09:30 |
| UK Jan Trade Balance Non EU GBP/Mn | -£3400 | -£3796 | GBP / 09:30 |
| UK Jan Trade Balance | -£2300 | -£2895 | GBP / 09:30 |
| EC Jan Industrial Production SA MoM | 0.20% | 0.00% | EUR / 10:00 |
| EC Jan Industrial Production WDA YoY | 0.10% | -0.20% | EUR / 10:00 |
| CA 4Q Capacity Utilization Rate | 83.60% | 83.40% | CAD / 12:30 |
| CA Feb Teranet/National Bank HPI MoM | -0.10% | 0.20% | CAD / 12:30 |
| CA Feb Teranet/National Bank HP Index | - | 167.43 | CAD / 12:30 |
| CA Feb Teranet/National Bank HPI YoY | - | 4.70% | CAD / 12:30 |
| CA Jan New Housing Price Index MoM | 0.10% | 0.10% | CAD / 12:30 |
| US Feb Retail Sales Advance MoM | 0.30% | -0.80% | USD / 12:30 |
| CA Jan New Housing Price Index YoY | 1.60% | 1.70% | CAD / 12:30 |
| US Feb Retail Sales Ex Auto MoM | 0.50% | -0.90% | USD / 12:30 |
| US Feb Retail Sales Ex Auto and Gas | 0.30% | 0.20% | USD / 12:30 |
| US Feb Retail Sales Control Group | 0.40% | 0.10% | USD / 12:30 |
| US Mar 7th Initial Jobless Claims | 305K | 320K | USD / 12:30 |
| US Feb 28th Continuing Claims | 2400K | 2421K | USD / 12:30 |
| US Feb Import Price Index MoM | 0.20% | -2.80% | USD / 12:30 |
| US Feb Import Price Index YoY | -8.90% | -8.00% | USD / 12:30 |
| US Jan Business Inventories | 0.10% | 0.10% | USD / 14:00 |
| US 4Q Household Change in Net Worth | - | -$141B | USD / 16:00 |
| US Feb Monthly Budget Statement | -$191.0B | -$193.5B | USD / 18:00 |
Currency Tech
EUR/USD
R 2: 1.0907
R 1: 1.0725
CURRENT: 1.0636
S 1: 1.0495
S 2: 1.0400
GBP/USD
R 2: 1.5270
R 1: 1.5136
CURRENT: 1.5005
S 1: 1.4893
S 2: 1.4814
USD/JPY
R 2: 124.14
R 1: 122.03
CURRENT: 121.04
S 1: 120.61
S 2: 119.38
USD/CHF
R 2: 1.0240
R 1: 1.0190
CURRENT: 1.0007
S 1: 0.9825
S 2: 0.9722