Daily Market Review: March 7, 2013‏

BoJ Press Conference (Jap; Tentative)

SNB Chairman Thomas Jordan speaks (CH; 09:00 GMT)

Spanish 10-Year Obligacion Auction (EU; 09:45 GMT)

German Factory Orders (MoM) (Ger; 11:00 GMT)

Interest Rate Decision + BOE QE Total (GB; 13:00 GMT)

Interest Rate Decision (EU; 13:45 GMT)

Trade Balance + Building Permits (MoM) (Can; 13:30 GMT)

ECB Press Conference (EU; 13:30 GMT)

Initial Jobless Claims + Nonfarm Productivity (QoQ) + Trade Balance (U.S; 13:30 GMT)

The U.S. economy grew at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos, the Federal Reserve said. “The majority of districts reported modest improvements in labor market conditions, although hiring plans were limited in several districts,” the central bank said in its Beige Book business survey, which is based on reports from the Fed’s 12 regional banks. Another report showed companies added more workers than projected in February, indicating the U.S. job market will keep expanding this year, according to a private report based on payrolls. Other news is that the outlook for U.S. business spending is improving as rising earnings, easier credit and pent-up demand prompt companies from Warren Buffett’s Berkshire Hathaway Inc. to Chrysler Group LLC and Lowe’s Cos. (LOW) to expand.

The Bank of Japan (8301) rejected a call for an immediate start to open-ended asset purchases in Governor Masaaki Shirakawa’s final meeting before a new leadership takes over at the central bank. The board voted eight-to-one against the proposal by member Sayuri Shirai, the BOJ said in a statement in Tokyo today after a two-day meeting. Policy makers left an asset-purchase fund unchanged at 76 trillion yen ($810 billion) as forecast by all 23 analysts in a Bloomberg News survey.

The European Central Bank has to decide how big a threat Italy poses to Europe’s recovery. A rejection of austerity in the euro area’s third-largest economy has produced a political stalemate that’s driven up bond yields and undermined confidence in ECB President Mario Draghi’s scenario of a gradual economic upturn.

EUR/USD: The EUR/USD dropped yesterday on signs of improvement in U.S. labor market added to the case for the Federal Reserve to end stimulus sooner than initially planned. However, today the pair was trading higher at 1.29901 at the time of writing on market correction after Standard & Poor’s revised up Portugal’s credit outlook. Trading seems a bit sticky (within 30pips) since the beginning of the Asian session as investors turned cautious ahead of the very busy and hectic day. A series of important data and news will be released during the day both in the Eurozone and the U.S. The events scheduled to be released today are, the Spanish 10-Year Obligacion Auction, German Factory Orders (MoM) (Forecast: 0.5% - Previous: 0.8%), the Interest Rate Decision in the Eurozone (Forecast: unchanged at 0.75%) and the ECB Press Conference in the Eurozone. Later in the day, the U.S will release the Initial Jobless Claims (Forecast: 355K – Previous: 344K), the Nonfarm Productivity (QoQ) (Forecast: -1.6% - Previous: - 2.0%), the Trade Balance (Forecast: -42.6B - Previous: -38.5B) and the Unit Labor Costs (QoQ) (Forecast: 4.3% - Previous: 4.5%). Today’s trading session is expected be very volatile. Investors should wait for data and news to come on market before taking a position on the pair. The resistance level is at 1.30666 and the support level is at 1.29273.
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GBP/USD: The GBP/USD was trading below the key level of 1.50000 at 1.49990 at the time of writing after an industry report released earlier revealed that private-sector hiring came in stronger than expected in February, adding to the case for the Federal Reserve to end stimulus sooner than initially planned. Here again, trading seems sticky ahead of the Interest Rate Decision in the UK, which is expected to remain unchanged at 0.50% and the BOE QE Total, which is also expected to remain unchanged at 375B. A higher than expected figures are bullish for the GBP, while a lower than expected figures are bearish for the GBP. Later in the day, the U.S will release the Initial Jobless Claims (Forecast: 355K – Previous: 344K), the Nonfarm Productivity (QoQ) (Forecast: -1.6% - Previous: - 2.0%), the Trade Balance (Forecast: -42.6B - Previous: -38.5B) and the Unit Labor Costs (QoQ) (Forecast: 4.3% - Previous: 4.5%). Other events likely to affect the trend of the pair are the Interest Rate Decision in the Eurozone, which will probably stay at a record-low 0.75 percent, according to 56 of 61 economists surveyed by Bloomberg. Moreover, the President Mario Draghi will hold a press conference. These data and news will affect market sentiments for risky assets. A wait and see approach will be a very good strategy on the pair. The resistance level is at 1.50885 and the support level is at 1.49283.
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WTI (Oil): Oil was trading lower at 90.270 at the time of writing after U.S. crude stockpiles rose almost five times more than forecast. U.S. oil-demand weakness may be overstated because of disruptions from Hurricane Sandy in October at pipelines and terminals that have made it difficult for refiners to ship products, Stefan Wieler, a London-based analyst at Goldman Sachs Group Inc., said in a report yesterday. Events likely to affect the trend of the commodity today are the BoJ Press Conference, the Interest Rate Decision and the BOE QE Total data in the U.K and the Interest Rate Decision and the ECB Press Conference in the Eurozone. Moreover, the U.S will release the Initial Jobless Claims, the Nonfarm Productivity (QoQ) and the Trade Balance. Other news likely to weigh on the commodity is that the death of Venezuelan President Hugo Chavez should have a limited impact on the country’s oil production in the short term, while a change of leadership may foster longer-term investment and boost output. Venezuela pumped 2.86 million barrels a day of crude last month, according to a Bloomberg survey of producers and analysts. All these data and news will bring fluctuation on the market. Investors should stay cautious and wait for data to come market. The resistance level is at 91.169 and the support level is at 89.513.