USA

US news flow was light yesterday as the US markets remained closed in observance of President`s Day. Today sees the Empire State Manufacturing m/m (expected at -10.5) being released. But the main focus will be on crude and its related impact on equities and the dollar as the Russia-OPEC talks loom.

UK

PM Cameron looks set to call an EU referendum on Friday as his Cabinet threaten revolt if the current euro sceptics are not quietened by the weekend. Economic data out of the UK come in the form of;

  • CPI y/y expected at 0.3%
  • PPI input m/m expected at -1.2%
  • RPI y/y expected at 1.4%
  • Core CPI y/y expected at 1.3%
  • HPI y/y expected at 7.9%


Better than expect figures, especial for the CPI, will see the GBP gain across the board as the UK economy shows signs of heating and potentially wage inflation, which will put pressure on the BOE to revisit their current monetary policy stance.

ASIA

Asian equities extended on yesterday’s gains as the increase in crude prices kept sentiment upbeat. The Nikkei 225 made 0.2%, the Shanghai Comp gained 2.5% and the Hang Seng gained 1.7%. Japan sees the release of Core Machine Orders m/m , expected at 4.6%, being released during the Asian session tonight.

Australia/ New Zealand

The AUD was bid overnight on the back of the RBA minutes, which despite reiterating that low inflation is here to stay for a while and could warrant a further cut, left a bullish tone as they stated that the prospects for a gradual increase in growth is reasonable.

The KIWI could not maintain initial bullishness from Inflation Expectation q/q reaching 1.6% as markets properly digested that this was in fact levels not seen since 1994, prompting for the prospects of further easing.

EUROPE

ECB President Draghi`s speech saw the EUR punished as he stated that progress on inflation is less than expected and sighted global factors as growing concerns. He extended his dovish tone by stating that the growing head winds might require measure to stabilise prices and the ECB stands ready to act as and when needed.

Today sees economic data out of the EU in the form of the German and EU ZEW Economic Sentiment figures, expected at 0.1 and 10.3 respectively.

COMMODITIES

Oil prices continues to recover with WTI futures climbing over 4% in early trade, ahead of the Russia-OPEC talks, scheduled for today.This will then be a good time to start trading. The rumour mill also touts Russia-Saudi and Qatar-Venezuelan talks. Should an agreement be reached which see supply being tightened, we will see crude extend its gains aggressively as market digest the new status quo of demand and supply. Should talks fail, we would expect crude to head south again as oversupply threats re-enter the market.