Mar 17, 2016 - Early European data will see the ... There is a raft of US data expected .... *COMMENTARY: The recovery f
A Eurex publication focused on European financial markets, produced by MNl
Morning Briefing March 17th 2016 Thursday throws up a full day on both sides of the Atlantic, with the Bank of England's policy decision likely to be the highlight of the European session. ECB President Mario Draghi will appear in Brussels for European Council Meetings throughout the morning. Early European data will see the release of the Swiss GDP forecast, with the SNB's latest policy decision expected at 0830GMT. At 0900GMT, the Norges Bank will announce their policy decision, with analysts forecasting a 25 bps cut in the main rate. The main euro area data will be published at 1000GMT, when the final February inflation numbers will be released, along with the Feb trade data.
At midday London time, the Bank of England will publish the latest policy decision and release the minutes of the March meeting. UK survey data has disappointed since the February MPC meeting, suggesting that growth could be decelerating. February CPI and December wage growth data came in slightly higher than BOE forecasts whilst oil prices are up 18% since the January meeting. That said, any positive impact generated by these is likely to be offset by the volatile global economic climate, lacklustre domestic activity and the uncertainty resulting from the UK's upcoming referendum on membership of the EU. Expectations are for rates to be unchanged at 0.5%, with the stock of QE maintained at stg 375 billion, with unanimous 9-0 votes on both.
There is a raft of US data expected at 1230GMT, when the latest jobless claims data, the current account balance and the Philly Fed manufacturing index cross the wires. The level of initial jobless claims is expected to rebound by 11,000 to 270,000 in the March 12 employment survey week after an 18,000 decrease in the previous week. The Philadelphia Fed index is expected to improve further to -2.0 after rising to -2.8 in February, still indicating contraction in that part of the Northeast. At the same time, the Canadian The latest JOLTS data will be released at 1400GMT, along with the March leading indicators. The index of leading indicators is forecast to rise by 0.2% in February after a 0.2% decline in January. Late US data will see the M2 money supply for the most recent period published at 2030GMT.
Global Economic Trading Calendar
Markets FOREX: Regional equity markets traded mostly higher in the AsiaPacific region, supported by a move dovish FOMC. However, major currency pairs mostly traded within narrow ranges with one exception, Aussie-dollar raced higher from a session low of $0.7534 to print a fresh new 2016 high of $0.7619, the local jobs data did little to dent rise appetite amid higher equities and firmer commodities, although less jobs were created, the unemployment rate fell to 5.8% from 6.0%, the pair was last at $0.7605. Dollar-yen was confined to a tight Y112.54 to Y112.96 range and was last at Y112.56, effectively, unchanged from the close in New York. Meanwhile, euro-dollar consolidated gains made post-FOMC and was held hostage in a $1.1206 to $1.1229 range. US STOCKS CLOSE: US stocks took comfort Wednesday from the notion of lower U.S. Treasury yields for longer in the wake of the FOMC decision to keep policy steady and lower the dot plots. DJIA closed up 74 pts or 0.43% at 17,325.76, the Nasdaq Composite closed up 35 pts or 0.75% at 4,763.970 and the S&P 500 closed up 11 pts or 0.56% at 2,027.22. The S&P 500 topped out at 2,031.00 earlier, the highest level since Jan 4, when the index peaked at 2,038.20. From the 2016 low of 1,810.10, seen Feb 11 to today's high, the S&P 500 was up 12.2%.
US TSY FUTURES: Treasury futures have had very little response to the just released Australian jobs data, which saw the percentage of unemployed persons drop to 5.8% down from 6% in February, though the Austrian economy only added 300 jobs on a forecast of a 18k rise according to MNI's median expectations. Instead 10yr futures have eased 3-ticks from their earlier highs as the Fed's gradualism gives the green light to risk assets, with the Nikkei up 1.45%, e-mini S&P up 4.25 points, while Crude oil is up another 71c or 1.83% from the close. Currently 10yr futures are 1.5-ticks higher than the close.
FOMC policy statement was released to the markets and the first half of Far Eastern trading has seen speculative jockeying / consolidation just beneath the late North American session highs, as the metals try to establish an 'equilibrium' level. With the Fed's meeting dispensed with, there has been a return to more robust levels of interest for gold and silver but PGM volumes remain somewhat depressed. The Yuan Central Parity Rate was set at 6.4961 (vs 6.5172 yesterday) by the PBoC and the Shanghai Composite Index which opened +0.17% higher (2,875.41) was +0.56% higher (2,886.40) at 0400 GMT.
JAPAN STOCKS: Japanese stocks have posted strong gains during the aftermath of the FOMC close, with key indexes posting +1.25% gains during Thursday's morning session. The Nikkei has closed for lunch up 1.39% or 235.12 points at 17,209.57, while the Topix is trading up 1.26% or 17.16 points at 1,377.66. In options space the Apr'16/Jun'16 17.5k/18.5k calendar call spread has traded for 1k at 21, with sources noting that this has been a very popular trade with the fund community buy selling Apr'16 to fund Jun'16 vol.
OIL: WTI crude oil futures for Apr'16 delivery last up $0.64 at $39.10 per barrel, after a $38.47 to $39.38 range in Asia today, on solid volume as liquidity starts to shift into the May'16 ahead of the expiry of the front month next Monday. Besides rolls, the outrights have rallied steadily post-FOMC and got another kick along when the Nikkei opened strongly today in Asia. Given most of the commodity complex has rallied post-FOMC (as has equities), it's hard to discern how much is momentum and how much is energyspecific, but either way the contract still sits above the old recent high at $39.02, and with the DOE/EIA inventory report Wednesday showing only a small rise in stockpiles last week but production slowing to its lowest level since late 2014, confidence is growing that the lows are in place and events are starting to turn for the energy complex..
PRECIOUS METALS: Precious metals rebounded viciously from their daily lows after the dovish
Technical Analysis BUND: (M16) Above 21-DMA To Shift Focus Higher *RES 4: 163.99 Bollinger band top *RES 4: 167.35 1.500 Fibonacci projection 166.16-163.79 *RES 3: 163.40 High Mar 10 *RES 3: 167.07 1.382 Fibonacci projection 166.16-163.79 *RES 2: 162.48 21-DMA *RES 2: 166.62 Rising weekly channel top (2014 & 2015 Lows) *RES 1: 162.22 High Mar 14 *RES 1: 166.25 2016 & Record high Feb 24 *PREVIOUS CLOSE: 161.77 *PREVIOUS CLOSE: 165.99 *SUP 1: 161.02 Low Mar 15 *SUP 1: 165.04 Rising daily channel base *SUP 2: 160.81 Low Mar 10 *SUP 2: 164.75 Low Feb 23 *SUP 3: 160.52 55-DMA *SUP 3: 164.66 21-DMA *SUP 4: 160.44 Rising weekly channel base (Continuation) *SUP 4: 163.72 Low Feb 8 *COMMENTARY: O/S daily studies and the Bollinger base appear to be *COMMENTARY: The recovery from below the channel base Tuesday having an impact with M16 remaining supported ahead of Thursday’s was followed up with fresh 2016 and record highs Wednesday and low. Bears now look for a close below 160.81 to reconfirm the bearish pressure remaining on fresh highs to end the week. The Bollinger top bias and below 160.02 to shift focus to layers of support 157.88-159.05. (116.31) remains the key concern for bulls who remain focused on a Bulls need a close above the 21-DMA to confirm an easing of bearish break higher targeting 166.62-168.21 where channel tops and pressure and to shift focus back to 163.40-00 where the Bollinger top is Fibonacci projections are located. Bears still need a close below the found. channel base to ease bullish
EUROSTOXX: 2951.13-3034.36 Support Region Key *RES 4: 3195.79 High Jan 5 *RES 3: 3153.13 100-DMA *RES 2: 3130.46 High Jan 7 *RES 1: 3124.72 Bollinger band top *PREVIOUS CLOSE: 3062.05 *SUP 1: 3034.36 Rising daily channel base *SUP 2: 2975.52 55-DMA *SUP 3: 2972.93 21-DMA *SUP 4: 2951.13 High Feb 26 now support *COMMENTARY: O/B daily studies and the Bollinger top have resulted in continued hesitation ahead of the 3130.46 resistance with the 100-DMA just above. Layers of support 2951.13-3034.36 where the channel base, 21 & 55-DMAs are located remain key. Bears need a close below 2951.13 to end bullish hopes and shift overall focus back to 2016 lows. While the channel base supports bulls retain focus on 3130.46-3267.37.
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