Road to somewhere
EUR/USD hit an Asia-session low of 110.30 and from a longer-term perspective, there is little to stop it heading towards parity, says Saxo Bank's head of forex strategy, John J Hardy.
"If we look at EUR/USD from a monthly perspective, there is really nothing in terms of support aside from a few round numbers all the way down close close to parity with a 76.4% retracement," he says. "If the air continues to come out of the balloon here, that's where we may be focusing."
EUR/USD was trading at 1.1051 at 0755 GMT. Hardy says that the next stop based on that retracement would see the pair at 1.0075.
He urges caution nevertheless, especially ahead of and around the European Central Bank meeting today.
"We have to stay tactically short as long as we are below 111.00-50 and that's what we'll be watching in the wake of the ECB meeting," he says.
Bonds await
While that ECB meeting is not expected to deliver fireworks today, the Fixed Income Desk's Michael Boye is expecting it to "generate more action," after a quiet start to the week for bonds.
"It's the main event of the day and while nothing earth-shattering is expected, the press conference is likely to be about the QE details of a technical nature," says Boye. "With regards to Greece, they successfully raised the amount they were looking for yesterday in the T-bill auction."
"We will also see the inflation guidance for 2017 which will be interesting given the low yields we have had recently," he says.
Bunds lost another couple of basis points yesterday down towards 156 but, says Boye, comparisons with the "160-high we had earlier in the week are not entirely comparable" as we have moved from the March contract to the July contract.
Shanghai grimaces
The big National People's Congress in China got under way today and prime minister Li Keqiang's determined efforts to put something of a damp squib on the country's GDP growth prospects did not go down well on the Shanghai Composite Index, says Saxo's Singapore Desk's Christoffer Moltke-Leth.
"The markets were not overly impressed and Shanghai has been trading lower through the day," says Moltke-Leth.
The headline grabbing figure may have been that move from 7.5% planned growth in 2014 (7.4% actual) to a 7.0% target for 2015, but Li Keqiang's comments that the Chinese market is "too inefficient" and "capacity for innovation in China is not good enough" may have caused the bigger stir.
Li Keqiang indicated more reforms are on the way including the freer float of the renminbi and predicted that the budget deficit would rise from last year's 1.8% of GDP to 2.3% this year.
Commodities mixed bag
The commodities currencies endured a mixed bag reaction during the Asia session with AUD/USD muted in its reaction to the news out of China.
However, according to a speech by Reserve Bank of Australia deputy governor Philip Lowe, the pair "is now moving closer to fair value" but is still being affected by the various monetary easing policies around the globe, says Moltke-Leth.
NZD/USD on the other hand was a big mover during the Asian session giving up 60 pips after the New Zealand Reserve Bank published a document that said it would increase capital requirements on lending.
CAD meanwhile seems to go from strength-to-strength and could rise again Friday if the US nonfarm payrolls is another strong number.
"CAD is interesting as a buy against some of the crosses, if not the dollar," says Hardy. He suggests shorting NZD/CAD based on the 200-daily moving average with a move towards 0.9100. "If the US economy is strong, then CAD is the most exposed to this."
Boots on
And if you're feeling like kicking something around the park for a while, Saxo Bank's head of equities Peter Garnry is getting behind a trade pick on Adidas following its Q4 print this week.
Despite the sportswear giant's miss on profit expectations as a consequence of some significant impacts from FX and weakness in Eastern Europe and Russia, the 6% Q4 rise has Garny forecasting "deeper growth".
Opec foiled
Finally, there are indications that Opec's market-share grab strategy at all costs may not be delivering the results that the global cartel may have hoped for, says Garnry, following a talk from a top ExxonMobil executive yesterday who said "the world will need to settle in for a relatively long period of lower oil prices."
"US shale production is proving more resilient to lower oil prices than was originally thought," says Garnry, a clear spanner in the works for Opec's determined strategy.