Yesterday saw muted trade during the US session with exception of the JPY and GBP which both experience volatility as we saw the GBP strengthen while JPY weekend. The USD was relatively flat given that market participants from the region were celebrating Presidents Day. Walls Street was closed but this didn’t stop Asian equites form strutting their stuff as we saw the Nikkei 225 enjoy the weakness in the JPY as it gained 0.7% overnight while the ASX 200 managed to regain early losses to finish at -0.1% after the RBA released its Monetary Policy minutes, which were relative neutral but with a dovish warning of a potential for a prolonged dampening of inflation.
Commodities traded relatively flat on the session as we saw gold yet again rejected at 1244 as sellers piled on the resistance level to prevent further upside and ultimately protecting the key 1250 level. As it stands gold has retreated as bulls look to regain their composure for another attack north. However, bears will now have moved the front line lower, making 1235 the new frontier for bulls to cross. Crude oil continues to hover around 54 after initial strength could not be built on and the commodity finds itself in equilibrium as more data is anticipated this week in which traders will look for strong economic figures and lower inventory builds to prop price up.
Today’s key data comes out of the EU, in the form of the Service and Manufacturing PMI`s expected form Germany, France and the EU as a whole. PMI data are regarded as leading indicators and represent the views of purchasing managers in their respective sectors along with their expectations for the future demand of their products and services which will reverberate into economic growth in general thus making better than expected release a catalyst for a stronger EUR while worse than expected data will see the EUR sold off.
The cherry on top comes out of Australia, where we expect the Construction Work done q/q and Wage Price index q/q figures along with a speech by the RBA`s governor Lowe. Better than expected data or a hawkish speech by Lowe, will see the AUD strengthen across the board while worse than expected releases or a dovish tone by Lowe will see the AUD sold off as bulls finally relinquish support for the currency.