Asian equities traded mixed with the Nikkei 225 up 1.8% in the aftermath of the BOJ more dovish stance in last week’s meeting. The ASX 200 traded up 1.1%. The Shanghai was the under performer shedding 1.7% after worse than expected data out of China continues to drag equities down after the Official Manufacturing PMI printing at 49.4 vs 49.6, its lowest level since AUG 2012. The JPY continues to weaken, after last weeks BOJ meeting, in what looks to be a continued inflationary environment for an extend period for Japan.


ECB`s Praet said that QE is having a positive impact but expected a longer period for the full effects on inflation to be felt and would like to see the ECB maintain its current inflation target. These comments came after Fridays CPI data showed stability in inflation as measured by the CPI Flash Estimate y/y (0.4% vs 0.4%) and the Core CPI Flash Estimate (1% vs 0.9%). However the EUR continued to be weighed down by worse than expected German Retail sales (-0.2%vs 0.3%) and Spanish Flash CPI y/y (-03% vs 0.1%). News of note coming out of the EURO ZONE is President Draghi`s testimony in the European parliament where he is due to testify about the 2015 ECB annual Report. A more hawkish tone will be well received by EUR bulls. While a more dovish tone will see bears push for a lower EUR.


The UK economy continues to be weighed down by economic factors and political factors as Prime Minister Cameron looks to negotiate the future of the UK in the Euro zone, last night saw the president of the European council walk out of talk with a firm “no deal”. Cameron has under 24 hours to strike a deal on his preferred timetable, under which a referendum would be held in June on whether Britain will remain in the EU. Elsewhere, the BOE is expected to cut its growth and inflation forecast later this week with analysts starting to consider a UK rate cut as opposed to a raise.

Today sees the UK Manufacturing PMI and Net Lending to Individuals m/m figures, expected at 51.8 and 4.9B consecutively, leading the charge for what promises to be a bumpy week for the GBP.


The US was victim to a barrage of bad data on Friday which saw Advanced GDP, Employment Cost and Consumer Sentiment all come out lower than expected with the Chicago PMI being the only ray of light as markets start to wonder if the US acted too quick in raising rates and whether the 20% chance of the US falling back into recession, as per analysts, might become a reality. Today’s data comes in the form of Core PCE Price Index m/m (expected at 0.1%), Personal Spending m/m (expected at 0.1%) and the ISM Manufacturing PMI (expected at 48.6). Better than expected numbers will ease the minds of US hawks as they look to accumulate positive data pre this week’s NFP release.


Crude oil prices slid overnight as the rumors of an OPEC and non-members decision to cut supply have remained just that as Iran announced that it has no plans to cut supply. In this game of chicken, unless all parties lower supply, there is no incentive for any to do so and Goldman Sachs sees a cut in supply as unlikely. Markets are expected to remain jittery as announcement out of OPEC and other oil producers are awaited.