Dovish comments out of Japanese PM adviser Honda, who said that the BOJ May increase stimulus in March along with suggesting a delay of a tax hike till 2019, failed to weaken the Yen which is now trading below 114.00 vs the greenback. Asian indices did not follow Wall Street’s lead and finished lower across the board as markets viewed recent talks of crude production curbing, by oil producing nations, as no more than talk which saw crude give back some of its recent gains.
Market will be watching for the latest figures out of China in the form of the y/y CPI and PPI, expected at 1.9% and -1.5% respectively. Both figures are expect to outperform the last release, and if they beat expectations, China will receive a much needed break from the recent economic demise.
AUSTRALIA and NEW ZEALAND
The AUD could not hold onto its gains made after a more than expected hawkish minutes report by the RBA and is trading below 0.71 against the greenback. Today’s data out of Australia, if better than expected, will give bulls another chance to break above 0.72 as we await the Employment change (expect at 12.9k) and the Unemployment rate which is expected at to remain at 5.8%.
Kiwi traders will be on the lookout for the PPI input q/q and PPI Output q/q figures releases later today. Analysts will be looking to see if the previous releases of 1.6% and 1.3% will be exceeded and if so will look to buy the kiwi across the board. Alternatively the KIWI will be sold off.
The GBP has continued its bearish ways after poor economic releases helped bears break out of the recent range. Political factors are also weighing down on the GBP as Cameron goes head to head with EU leaders as he warned that a BREXIT is at a tipping point.
Today sees more data out of the UK in the form of the Average Earnings Index 3m/y, Claimant Count Change and the Unemployment Rate, expected at 1.9%, -2.9K and 5% respectively. Worse than expected numbers would see the GBP down trend extended.
EU and German ZEW data disappointed markets and could not beat expectations which weighed down on the EUR despite ECB`s Weidmann trying to bring a more hawkish tone to the market. He commented that QE is not needed at the present time.
Jawboning from dovish FED members looked to keep the USD at bay with Harker stating that prudence dictates that the FED waits for stronger inflation data before a second rate increase and that he would not take more QE stimulus off the table. FED`s Rosengren added to the sentiment by stating that the Fed should take a more gradual approach amid rising global concerns and move slowly so that a 2% CPI is assured.
Markets have shrugged off these comments as the USD strengthens in anticipation of tonight’s FOMC Meeting Minutes, in which the tone for the March meeting will be set. Yellen will likely use these minutes to prepare markets for the MARCH vote with dovish commentary expected to reflect no action by the FED in March while a more hawkish Yellen will see USD surge as markets price in a further increase in rates.
Crude was less than impressed with the Doha meeting and dropped from its recent highs after the meeting outcome stated that Saudi, Russian, Venezuelan and Qatari oil ministers agreed to maintain production at January levels, provided other major exporters also agreeing. The price of oil is expected to remain sluggish as the game of chicken continues in this classic game theory play. Should a comprehensive solution be found, that would be half the game as just one producer failing to keep to the levels agreed on, threatens to place all producers on the offensive which will see oversupply concerns widen and very well lead to crude creating new multi year lows. Sign up wth opteck to start online trading!