Market Brief
Yesterday’s attacks in Brussels caught the market’s attention in such a way that traders remained immune to the majority of economic data released throughout the day. The single currency was heavily sold off as the uncertainty generated by the bombing increased, pushing investors to seek safe-haven assets. In this environment, gold rose roughly 1%, the Japanese yen surged 0.65% against the dollar, while the Swiss franc edged slightly higher against the euro, with EUR/CHF down 0.35% to 1.0876. However, as expected, the effect of the attacks proved short-lived as investors quickly dumped safe haven assets. Gold was even down almost 2% from yesterday’s highs, while USD/JPY moved above 112.20, compared to 111.40 on Tuesday morning.
It was a tough day for the pound sterling, which was under significant downward pressure after the attacks as investors feared these events could provide leverage for the Brexit case. These selling pressures on the pound were also exacerbated by the release of poor economic data. Headline CPI came in at +0.2%m/m in February, well below market expectations of 0.4% but much better, however, that the 0.8% contraction in the previous month. GBP/USD fell initially to 1.4260 in the early European session and continued to slide during the day, reaching 1.4170 by the end of the day. In Tokyo, the cable was treading water, waiting for European traders to return to their desks.
In the commodity complex, metals, crude oil and natural gas were down. Gold fell, 1.10%, silver slid 1%, palladium was down 1%, while platinum edged down 1.20%. The West Texas Intermediate fell 1.13% to $ 40.98 a barrel, while its counterpart from the North Sea was off 0.98% to $ 41.38. The most liquid iron ore contracts on the Dalian commodity exchange fell roughly 2%, weighing on the Australian dollar. In Sydney, AUD/USD settled down 0.30% to 0.76. However, over the medium-term, the pair is moving sideways, stuck between 0.7550 and 0.7680. A break of these levels could trigger a new trend.
In the equity market, Asian regional markets are broadly lower this morning with the exception of mainland Chinese shares, which were trading in positive territory. The Shanghai Composite rose 0.35%, while the tech-heavy Shenzhen Composite was up 1.16%. Japanese shares were also trading lower witht the Nikkei and the Topix down 0.28% and 0.42% respectively. In Europe, equity futures are mixed with the Footsie down 0.22%, the CAC down 0.14%, while Swiss and German shares are trading in positive territory. However, we expect European equities to erase yesterday’s losses as the effects of Brussels attacks continue to fade.
Today trades will be watching PPI from Spain; CPI from South Africa; ZEW survey from Switzerland; MBA mortgage application, new home sales, crude oil inventories and Fed’s Bullard speech on TV; current account balance and foreign direct investment from Brazil; trade balance from New Zealand.
Currency Tech
EUR/USD
R 2: 1.1495
R 1: 1.1376
CURRENT: 1.1191
S 1: 1.1058
S 2: 1.0810
GBP/USD
R 2: 1.4668
R 1: 1.4591
CURRENT: 1.4170
S 1: 1.4033
S 2: 1.3836
USD/JPY
R 2: 117.53
R 1: 114.91
CURRENT: 112.37
S 1: 110.67
S 2: 107.61
USD/CHF
R 2: 1.0093
R 1: 0.9913
CURRENT: 0.9754
S 1: 0.9651
S 2: 0.9476