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Forex Flash: Antipodean monetary policy expectations to diverge – ANZ

 

 

Looking ahead, we expect monetary policy expectations to move in opposite directions again as the Australian market prices in a less aggressive easing profile and the NZ market prices out rate hikes. In New Zealand, the market has moved to price in 80% odds of a rate hike by October. The 2-year swap rate has surged as a consequence. Markets can and will lurch from one extreme to the other.

 

However, we are cognizant that the NZ dollar trade-weighted index has hit a record high in the past week (partly due to weakness in this cross), thereby tightening NZ financial conditions. We are also mindful of NZ’s contractionary fiscal stance; and the potential for macro-prudential policy to take pressure off the RBNZ. These factors do not, in our view, lend themselves to a 2013 commencement in the rate hike cycle. And as such, we expect rates to moderate in NZ.

 

By contrast, the RBA has scope to ease as today’s February minutes have again made clear. We expect cuts in June and November. However, there appears to be growing fears in the market that the RBA are done for now. This is a vulnerability and may place further upward pressure on AUD short end rates

 

 

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Feb 19, 2013

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Forex: EUR/USD still finds opposition around 1.3370

 

 

The EUR/USD spiked to 1.3373 high on the release of very appealing German and Eurozone economic sentiment figures by the ZEW February survey, at 48.2 and 42.4, respectively. After trading below the opening price throughout the rest of the European session, the market strengthened back to its highs on US money flows and just ahead of US NAHB housing market index.

 

The Housing Market Index by NAHB was expected to rise from 47 to 48 in February, but actual data points to a drop to 46, disappointing investors. The pair could only rise to as high as 1.3372 and is currently stuck at 1.3360/70.

 

“The EUR/USD currency pair continues consolidating inside a narrow trading range near the level of 1.3330”, wrote Roboforex.com analyst Igor Sayadov, expecting the pair to extend the downside towards 1.3240. “After reaching this target, the pair may make a reverse to start a new ascending movement”; he added.

 

 

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Feb 19, 2013

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[OctaFX_Farid]

 

 

Forex: EUR/USD still finds opposition around 1.3370

 

 

The EUR/USD spiked to 1.3373 high on the release of very appealing German and Eurozone economic sentiment figures by the ZEW February survey, at 48.2 and 42.4, respectively. After trading below the opening price throughout the rest of the European session, the market strengthened back to its highs on US money flows and just ahead of US NAHB housing market index.

 

The Housing Market Index by NAHB was expected to rise from 47 to 48 in February, but actual data points to a drop to 46, disappointing investors. The pair could only rise to as high as 1.3372 and is currently stuck at 1.3360/70.

 

“The EUR/USD currency pair continues consolidating inside a narrow trading range near the level of 1.3330”, wrote Roboforex.com analyst Igor Sayadov, expecting the pair to extend the downside towards 1.3240. “After reaching this target, the pair may make a reverse to start a new ascending movement”; he added.

 

 

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Feb 19, 2013

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Forex: AUD/USD trading at support near 1.0310

 

 

The AUD/USD has spent the afternoon of European trading in a tailspin, as the yesterday’s gains now seem like a distant memory. After the publication of US data, the pair has found traction at the 1.0310 support, where the pair is presently testing in these moments, already suffering a decline of -0.41%.

 

In the United States, Building Permits (MoM) were reported at 0.925M in January, beating estimates of only 0.915M. Meanwhile the vaunted Producer Price index ex Food and Energy (MoM and YoY) grew +0.2% in January (in line with expectations of +0.2%), and +1.8% (exceeding projections calling for only +1.6%) respectively. Finally, the Producer Price Index (MoM and YoY) climbed only +0.2% in January (slightly missing a consensus of +0.3%) and yielded +1.4% in January (consistent with projections) respectively.

 

According to the Technical Analyst Team at ICN.com, “The AUD/USD dropped sharply towards 1.0310, however we still think that the possibility for positivity is valid in that the pair couldn’t break 1.0275 levels. Moreover, the linear regression indicators worry us with negativity, but at the same time we will count on stability above the mentioned support at 1.0275 to keep the suggested scenario valid.”

 

ICN.com analysts posit the next supports at 1.0310, then 1.0275 and finally 1.0220. Should the pair initiate from a prolonged recovery, a break below the 1.0345 resistance will usher in the additional means of corrective structures at 1.0385 and 1.0400.

 

 

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Feb 20, 2013

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Forex: USD/JPY wavers after US data

 

 

USD/JPY wavered smoothly, rising to 93.20 and then pulling back to the 93.10 area, as investors continue to assess the latest string of US data, which showed jobless claims rose more than expected last week, while consumer prices were flat overall in January.

 

USD/JPY is currently trading around 93.10, still down 0.5% on the day, having bounced from a low of 92.78 during the European session.

 

As for technical levels, on the upside immediate resistances are seen at 93.52 (100-hour SMA), followed by 93.85 (intraday high). On the other hand, supports could be found at 92.78 (intraday low) and 92.65 (21-day SMA).

 

 

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Feb 21, 2013

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Forex Flash: NZD/USD uptrend hinges on stability above 0.8300 – Westpac

 

 

The RBNZ inflation expectations survey (Tuesday) will be the week’s highlight for markets. According to Global Strategist Sean Callow at Westpac, “We don’t expect a dramatic reversal of the 18-month decline in expectations just yet, indeed the last few CPI prints have been surprisingly low so this survey has downside risk.” The other important release is the Q4 terms of trade (Monday), which could surprise with a bounce based on lower import prices (currency effect). Migration (Wednesday), trade balance (Wed), building permits (Thursday) and business confidence (Thursday) complete a busy week.

 

Ultimately, “the 9 month long uptrend is at risk if 0.8300 below gives way. Global sentiment has soured during the past two days, and RBNZ Governor Wheeler talked the NZD moderately lower in a speech earlier this week. Should the Italian elections this weekend scare the bulls, the extreme long positioning in the NZD would be at risk of being pared. If 0.8300 holds, however, we will retain positive multi-month bias towards

0.8570 next.” writes Callow.

 

 

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Feb 21, 2013

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Bearish pressure increases on the Euro

 

 

The European currency extended its decline against the dollar on Thursday amid renewed signs the euro zone economy is struggling after the region's PMI came in lower than expected. Besides, the US dollar remains underpinned expectations the Fed may stop providing monetary stimulus after yesterday's FOMC minutes.

 

"As markets continue to digest the news, the evolving view is that the minutes might not be quite as hawkish as first perceived, but they are still hawkish enough to have global equity markets under significant pressure today and the greenback and yen benefiting from the unsettled market backdrop", says Nick Bennenbroek, Head of Currency Strategy at Wells Fargo Bank. "Next week's testimony from Fed Chairman Bernanke now takes on added importance as a barometer of whether the minutes simply reflect ongoing discussion, or a real changed in the Fed's policy view".

 

Elsewhere, the pound fell to a 2 ½-year low versus the greenback although it managed to trim losses, while the yen strengthened dragging USD/JPY below the 93.00 mark. Stocks and oil are broadly lower on risk aversion, but gold advanced slightly.

 

Euro falls below trendline support

 

The EUR/USD broke below the 1.3200 psychological level, and more importantly below an ascendant trendline coming off July 2012 lows, turning the immediate term and longer term bearish for the cross. A close below this level would reinforce the bearish perspective with 1.3110 as next target (100-day SMA) ahead of the 1.3070 zone (38.2% retracement of the 1.2041/1.3710 rally).

 

On the upside, the 1.3235 area offers immediate resistance to the EUR/USD, but the pair would need to regain the 1.3300 level to ease the immediate pressure.

 

In this regard, the BBH analyst team notes that "serious technical damage" is being inflicted. "The euro is falling through the uptrend drawn off last July (Draghi-induced) lows", they commented. "It comes in just below $1.3200 today. The next technical target is near $1.3070-80".

 

Meanwhile, Wells Fargo analysts note that for the balance of the week their view remains tilted to U.S. dollar strength and foreign currency weakness "as market potentially remain somewhat unsettled after the Fed comments, and depending on whether Germany’s IFO confidence survey shows similar weakness to today's Eurozone confidence data".

 

 

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Feb 21, 2013

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Forex Flash: Spain remains on the edge - BBH

 

 

Brown Brothers Harriman analysts note that Spain´s situation remains notably precarious, with EC calculations showing Spain as having ran a budget deficit of 10.2% of GDP last year, the most in three years.

 

They comment that it projects that a deficit this year of 6.7%, which seems a Herculean task to meet. They finish by writing, “There has been some suggestion that Spain could be given more time to reach its deficit targets, but given the lack of progress last year and some backtracking this year, it too may undermine credibility.”

 

 

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Feb 22, 2013

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Forex Flash: 10-year US treasuries await Fed testimony tomorrow – RBS

 

 

Markets continue to see a near-term 1.70% to 2.11% range in 10-year US treasuries Monday – According to the RBS Research Team, “key resistance remains at 2.11% in 10yrs. We recommend watching for ascending bear channel lines (1.945% in 10-years and 3.135% in bonds) – a break of which could extend the rally while a close above 2.11% in 10-years opens up 2.30%.”

 

Treasuries are little changed as markets await Ben Bernanke's testimony tomorrow and following the exit polls of the Italian election. Once past these, market focus is likely to shift to month end and a decent Treasury extension along with a likely trip over the Sequester cliff at the end of the week.

 

China's HSBC Flash PMI slipped to a 4-month low but Japanese stocks rallied sharply on word that Kuroda of the ADB would likely become the next BOJ Governor. EU spreads see semi-core little changed and peripherals modestly tighter. Moody's warned that the recent European Commission forecast for economic contraction this year is a credit negative for all European sovereigns.

 

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Feb 25, 2013

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Forex: GBP/USD trapped around 1.5110/20

 

 

The sterling continues its march north on Monday, advancing above the key level at 1.5100, as investors continue to digest the UK’s sovereign debt≠≠≠ downgrade by agency Moody’s.

 

Lee Hardman, Currency Analyst at BTMU, commented, “With fiscal policy set to remain tight, the burden to stimulate growth remains upon the BoE through looser monetary policy, and a weak/weaker pound”. The analyst added that a fragile external demand could hamper any support from a weak GBP, and these efforts could echo in higher inflation, affecting real incomes and consumption.

 

As of writing, GBP/USD is up 0.09% at 1.5108 facing the next resistance at 1.5330 (high Feb.22) ahead of 1.5393 (MA10d) and finally 1.5452 (high Feb.20).

On the downside, a breach of 1.5073 (hourly low Feb.25) would bring 1.4949 (low Jul.12 2010) en route to 1.4873 (low Jul.1 2010).

 

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Feb 25, 2013

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Forex: USD/CAD testing Friday’s tops, around 1.0260

 

 

The Canadian dollar is depreciating against the buck on Monday, breaking above the congestion range between 1.0220 and 1.0240 to revisit Friday’s highs around 1.0260, as risk aversion is creeping back to the markets,

 

“USD/CAD has run into better selling interest in the mid 1.02 area since Friday but the chart patterns suggest consolidation rather than a reversal in what remains, in our opinion, a very strongly-entrenched bull trend across a range of timeframes… We rather expect USD losses to remain limited currently and for USD dips will remain well supported and are a buy”, assessed the research team at TD Securities.

 

USD/CAD is up 0.35% at 1.0260 with the next resistance at 1.0342 (high Jun.29) ahead of 1.0363 (high Jun.28) and then 1.0382 (high Jun.6).

On the flip side, a breakdown of 1.0113 (MA10d) would expose 1.0101 (high Jan.25) and then 1.0055 (low Feb.18).

 

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Feb 25, 2013

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Forex Flash: Fed's Bernanke speech about QE as main focus – TD Securities

 

 

More important than US housing reports (house prices for December and new home sales for January) and Conference Board’s consumer confidence index for February (“where markets are looking for a bounce from the 14-month low of 58.6 up to 61.2”), TD Securities analysts point to Fed Bernanke’s semi-annual testimony to the Senate Banking Committee at 15:00 GMT as the main focus of the day.

 

“This will be the first update since the Fed adopted open-ended QE, and there is little doubt that Congress will be interested in exactly how and when the Fed will end the program”, wrote analyst Annette Beacher.

 

“Aside from Bernanke’s updated outlook on the economy (probably slightly more upbeat), the market will be looking for any further clarification on when QE will end and what specific triggers the Fed may use to gauge the end of the program”, she added.

 

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Feb 26, 2013

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Forex: GBP/USD rejected from 1.5215

 

The recovery of the pound against the dollar stalled once again at the 1.5215 area, where the 100-hour SMA reinforces static resistance. GBP/USD then fell back below the 1.5200 mark and even hit a fresh daily low of 1.5127, weighed by BoE's Tucker saying "real fx rates need to be lower".

 

However, GBP/USD found support and managed to recover some ground. The pair is currently trading around 1.5160, where it remains virtually unchanged since opening.

 

"Cable tried moving up but is facing resistance near 1.5200-15 levels. The bigger trend remains bearish and a failure to rise past 1.5200-15 will be a signal that the short covering is losing steam and a fall towards 1.4850 can well be seen in the coming days", says the Kshitij Consultancy Services Team. "A rise above 1.52 can push it further towards 1.5250-300".

 

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Feb 26, 2013

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Forex Flash: USD to weaken on today, helping EUR/USD to consolidate - Commerzbank

 

 

After last FOMC minutes making investors think the Fed is “hawk in a dove plumage”, Bernanke's speech yesterday “has caused market participants to rethink this view” and Fed's Chairman will speak again today in front of the House of Representatives’ committee.

 

“Just like yesterday he will show his commitment to QE3 and underline that the Fed will support QE3 for as long as necessary and that at present the benefits of QE3 outweigh the risks – even though he discussed the risks in detail”, wrote analyst Antje Praefcke.

 

“The statement in the minutes that “many” FOMC members showed concern about the side effects and risks of QE3 was omitted by Bernanke yesterday”, Praefcke continued, explaining that there was no indication yesterday of a possible end or changes to the scale of QE3 and he will avoid that again today.

 

However, solid and better than expected US data (Richmond Fed Index, consumer confidence, home sales) made up for Bernanke’s dovish approach. Commerzbank analysts expect US Durable goods orders for January to disappoint today. “However this is due to one-off effects and the underlying trend still continues to point clearly upwards”, they explained, predicting USD weakness today, helping the euro to consolidate somewhat. “But in the end the effect is likely to be limited while the crisis bogey still puts pressure on the euro”, Praefcke concluded.

 

 

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Feb 27, 2013

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US: Durable Good Orders fell 5.2% in January

 

 

The Commerce Department has informed that orders for US long-lasting goods contracted 5.2% during January, missing expectations at -4.4%, and down from +3.7% (revised) in December.

 

If we strip the Transportation sector, orders rose 1.9%, above estimates at +0.2% and better than December’s +1.0% (revised).

 

 

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Feb 27, 2013

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Forex: USD/JPY falls after US durable goods orders

 

 

The dollar weakened further against the yen and slipped to fresh daily lows after data showed US durable goods orders dropped more than expected in January as defense spending fell the most in more than a decade and demand for aircraft plunged although outside those volatile categories, there was underlying strength in orders.

 

USD/JPY lost nearly 30 pips on the data and printed a fresh daily low of 91.33. At time of writing, the cross is trading around 91.40, recording a 0.6% loss on the day.

 

As for technical levels, next supports could be found at 91.33 (intraday low), 91.00 (psychological level) and 90.85 (Feb 25 low). On the upside, resistances are seen at 92.25 (intraday high), 92.80 (100-hour SMA) and 93.00 (psychological level).

 

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Feb 27, 2013

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Forex Flash: EUR under siege as Italy continues to foment risk – Westpac

 

 

According to the Westpac Strategy Team, “The EUR seems unlikely to recover much further with 1.32/1.3300 seen as an ideal zone to initiate shorts for a bigger sell-off down to the 1.27/1.2800 zone.” Moreover, discussions for a grand coalition in Italy will likely last weeks and may not yield much. Fresh elections may be called but that will only occur after election laws are re-written. Yet the Italian parliament does not convene until 15 March.

 

The bottom line is that the odds a more market friendly Italian government is installed in the very near-term appear small and overall key event risks in coming sessions do not appear helpful to EUR. Draghi is sure to tone down the “positive contagion” commentary and given the stall in the Feb Eurozone PMI’s, he should emphasize that easy monetary conditions are here to stay for a while.

 

Ultimately, “He is likely to reiterate that the ECB’s OMT remains in place and ready for use but is likely to emphasize a tough love approach - recipients must sign up to reform and austerity.” the team predicts.

 

 

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Feb 28, 2013

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Forex: USD/CAD retreats after Canadian GDP

 

 

The Canadian dollar strengthened and dragged USD/CAD back from highs after data showed Canadian GDP grew 0.6% in Q4 2012, in line with market expectations, while the previous reading was upwardly revised to 0.7% from 0.6%.

 

USD/CAD pulled back from an 8-month high of 1.0341 scored right before the data, and slid toward 1.0300. At time of writing, USD/CAD is trading around 1.0305/10, where it is virtually unchanged since opening.

 

In terms of technical levels, the pair could face immediate supports at 1.0300 and 1.0260 (100-hour SMA), while resistances are seen at 1.0341 (intraday high) and 1.0360 (Jun 28 high).

 

 

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Mar 01, 2013

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Forex: USD/JPY breaks above 93.00

 

 

The US dollar continues to strengthen across the board, having recently broken above the 93.00 mark against the yen to hit its highest level since Monday, underpinned by better-than-expected US PMI and consumer confidence.

 

USD/JPY has risen nearly 70 pips within the last hour and reached a high of 93.50 before easing a tad. At time of writing, USD/JPY is trading around 93.35 where it records a 0.9% gain during the first day of March.

 

In terms of technical levels, if the USD/JPY manages to clear the 93.50 area, next resistances are seen at 94.00 and 94.30.On the other hand, immediate supports could be found at 93.00, 92.70 (20-hour SMA), and 92.40 (intraday low).

 

 

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Mar 01, 2013

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Forex: EUR/USD closes just above 1.3000; 1.29 vital area

 

 

 

 

 

One month and 745 pips later, the EUR/USD has been brought to earth from the February 1st high at 1.3710 to Friday March 1st bottom at 1.2965. However, the euro managed to recover some ground and following the US President Barack Obama speech on 'sequester', the pair has closed above the 1.3000 key level. Is time for bears now? Let see...

 

The EUR/USD closed Friday at 1.3020, around 0.30% negative on the day. In the 1-day chart, MACD, CCI and Momentum indicators points bearish while Stochastic is bull. In a wider windows the picture changes as MACD, CCI and Momentum are bullish with a stochastic neutral in the 1-day timeframe.

 

It seems there are signs of a changing trend as the EUR/USD has experienced 4 weeks of losses and the BPI is indicating that EUR is rising from 15.79 and the USD is above the 90 level. However, according to the FXstreet.com EUR/USD Forecast, the mid and long-term forecasts for the euro are 300 pips lower than last week.

 

 

 

According to TD Securities FX analysts Shaun Osborne and Greg Moore, there is still hope for Euro bulls if the pair remains above the 1.28/29 area. "Four weeks of successive losses keeps the EUR on track to test the 1.28/1.29 area (40-week/200-day MA/neckline of the huge, multi-month inverse H&S neckline that drove our late 2012/early 2013 bullishness on the EUR)."

 

"Holding this support zone (we can tolerate some temporary weakness below) is vital in sustaining a longer-term bull outlook," state both analysts.

 

But what's going on in the fundamental area? Sequester is fueling the risk aversion and the USD is joining it due its safe haven status. Meanwhile, the Italian disaster is looming in the Euro sentiment. As UBS' analysts Geoffrey Yu and Manik Narain well said in a recent report, "it will be interesting to see how the ECB responds after the Italian election and a return in risk aversion. "

 

Expectations will be the theme in the coming week as the RBA, BoC, ECB, BoE, and BoJ are expected to hold policy meetings. Beside Mario Draghi, nominated BoJ governor Haruhiko Kuroda will have his first speech and market will pay special attention on what he will say to support, or not, the JPY weakening. USD/JPY finished the week above the 93.50 level.

 

On the North American side, President Barack Obama said that the U.S. "will get through this, will not be an ‘Apocalypse’”. Earlier in the session, House Speaker John Boehner affirmed that there is still time to reach an agreement during the incoming week. Meanwhile, both Republicans and Democrats continue to kick the can down to each others backyard.

 

The Banking Week Ahead

 

As noted before, RBA, BoC, ECB, BoE, and BoJ will publish their monetary policy decisions. Despite some market voices are asking for a rate cut in the ECB, major expectations are that Draghi and his team will maintain his refi rate unchanged. The point of salt will come with the president's press conference.

 

US unemployment data and its Non Farm Payrolls, the European, Australian and Japanese Q4 GDP and the size of the BoE's APF will also take the market attention.

 

Major events

 

- ECB Interest Rate Decision (Mar 07 12:45 GMT)

 

- BoE Interest Rate Decision (Mar 07 12:00 GMT)

 

- BoJ Interest Rate Decision (Mar 07 02:00 GMT)

 

- U.S. Unemployment Rate (Mar 08 13:30 GMT)

 

 

- U.S. Nonfarm Payrolls (Mar 08 13:30 GMT)

 

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Mar 02, 2013

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Forex Flash: GBP/USD to move into a 1.45-1.55 range - RBS

 

 

 

 

The Sterling has been trading under pressure against the Greenback in the last weeks and after declining around 1350 pips since February 1st high at 1.6335, the GBP/USD seems to have found some support at 1.5000 where the pair built a consolidation movement.

 

RBS' analyst Paul Robson believes that the GBPUSD is moving into a 1.45-1.55 range, with risks skewed to the downside. "While we believe that GBP fundamentals have deteriorated further, and this will keep the pressure on GBP/USD, we do expect a kicker from a stronger USD tone from concerns over Italy."

 

"This may mean that EUR/GBP falls at the same time as GBP/USD falls. The USD part has led us to lower our assumed profile for GBP/USD," points Robson. Currently the GBP/USD is itching higher and trading at 1.5070, 0.20% above opening price action. "We now see GBP/USD moving into a 1.45-1.55 range, with risks skewed to the downside," concluded RBS' analyst.

 

The bank expects the Pound to remain below the 1.5000 level across the 2013. RBS' forecasts are March: 1.4800; Q2 1.4600; Q3: 1.4900 to end the year at 1.4900.

 

 

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Mar 04, 2013

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Forex Flash: FLS fails to firefight monetary arson - Nomura

 

 

 

 

Nomura Economist Phillip Rush notes that there is little evidence that Funding For Lending (FLS) is imparting much stimulus.

 

He writes, “We do not believe it can do in the presence of strict regulatory pressure to deleverage. Nor is it tying sufficient funding to Bank rate for a cut to be worthwhile. Increasingly repressive policies are being brought up, but softer communication changes are likely to come first, in our view.”

 

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Mar 04, 2013

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US markets in red as Chinese woes loom

 

 

 

 

Equities in the US markets are trading in the defensive position at the beginning of the week, as the likeliness of Chinese measures to counteract the worrying bubble in the housing sector could hamper the recovery of the domestic demand. The greenback, gauged by the US Dollar Index, is trading flat above the 82.00 mark, as markets remain directionless so far.

DownJones is down 0.33%, followed by the S&P500, 0.29% and the Nasdaq, 0.36%.

 

Markets in Euroland closed in the mix territory on Monday, as China and the so-called US ‘sequester’ undermined investors’ confidence. The IBEX35 advanced 0.72%, seconded by the CAC40, 0.27% while the FTSE100 and the DAX retreated 0.52% and 0.21%, respectively. The single currency is clinging to the 1.3000 level and trading in a narrow range between 1.2980 y 1.3020, reflecting the lack of direction in the markets.

 

In the commodities space the barrel of WTI is extending the recent bearishness, losing 1.17% at $89.63 while the ounce troy of the precious metal is posting meagre gains at $1572, or 0.02%

 

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Troika to suggest loan extension options for Ireland and Portugal and resume aid talks with Cyprus

 

 

At the press conference ending the two-day Eurogroup meeting on Tuesday EU Commissioner for Economic and Monetary affairs Olli Rehn assured that the the Troika would resume bailout negotiations with Cyprus as soon as possible, with an aim of reaching the final deal at the end of March.

 

As far as the extension of bailout loan maturities for Ireland and Portugal is concerned, Rehn said that it had been agreed that the Troika should consider establishing a new debt repayment schedule for a part of the loans. The final decision would be announced in April at the next Eurogroup meeting in Dublin.

 

The question of restricting bank bonuses, supported by all Eurozone officials except for UK Chancellor George Osborne, will be further examined from the side of technical details and put to vote in the nearest future.

 

 

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Fundamental Afternoon Wrap: Euro PMIs and Central Bank meets in focus

 

 

This afternoon institutional report reflects market mood today, with focus falling on the key central bank meetings later in the week and the stablising European services PMIs today. There is a feeling that absent sudden Italian developments, EUR/USD may struggle to decline much further, while in the UK the shock of Manufacturing PMIs was offset by today's numbers.

 

EUR

 

Brown Brothers Harriman analysts note that Euro area service PMIs showed a bit of improvement from the 47.3 flash reading, rising to 47.9. However they add that the real take away and one not lost on the foreign exchange market which sold into the euro's bounce, was that the February reading was weaker than the 48.6 reading seen in January. ING economist Martin van Vliet notes that the sharp increase in retail sales raises hopes that the consumer sector will be less of a drag on the Eurozone economy in the first quarter of this year. Overall, he feels that the tentative signs of stabilisation in retail sales, coupled with the upward revision to the earlier “flash” Eurozone composite PMI (to 47.9 in February), reinforces his belief that the ECB will keep interest rates on hold on Thursday.

 

Jane Foley of Rabobank feels that despite the downside risks, on the back of the QE headwinds undermining USD, she is reluctant to call lower lows on EUR/USD. However, the Italian situation looks like a wildcard that needs to be monitored. Nick Bennenbroek of Wells Fargo notes that the euro is up on firmer than expected data and with some indications surrounding the European Union finance ministers meeting that more flexibility surrounding Europe’s austerity plans may be possible.

 

GBP

 

Brown Brothers Harriman analysts note that after reporting weak manufacturing and construction PMIS, the UK reported a better than expected CIPS service PMI, the highest reading since last September. BNP Paribas economist Catherine Stephan notes that in February, activity accelerated again in services, with the good news partially offsetting the poor performance in the manufacturing sector. Overall the PMI composite Index remained in expansion territory.

 

USD

 

Marc Chandler of Brown Brothers Harriman notes reports from the YS Commerce Department that estimate hat the dollar value of US exports rose sharply last year to $2.2 trillion which means that US exports appear to have surpassed Chinese exports, which the Chinese government estimates at $2.05 trillion.

 

 

 

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