Monday 2nd March: European Open Briefing

Global Markets:

• Asian stock markets: Nikkei up 0.15 %, Shanghai Composite gained 0.30 %, Hang Seng rose 0.20 %, ASX rallied 0.60 %
• Commodities: Gold at $1220 (+0.60 %), Silver at $16.75 (+1.15 %), WTI Oil at $49.39 (-0.75 %), Brent Oil at $62.17 (-0.05 %)
• Rates: US 10 year yield at 2.009, UK 10 year yield at 1.79, German 10 year yield at 0.323

News & Data:

• Australia AIG Manufacturing Index 45.4, Previous: 49.0
• Australia MI Inflation Gauge 0.0 %, Previous: 0.1 %
• Australia HIA New Home Sales 1.8 % m/m, Previous: -1.9 %
• Australia Business Inventories -0.8 % m/m, Expected: 0.1 %, Previous: 1.2 %
• China Official Manufacturing PMI 49.9, Expected: 49.7, Previous: 49.8
• China Official Non-Manufacturing PMI 53.9, Previous: 53.7
• China HSBC Manufacturing PMI 50.7, Expected: 50.1, Previous: 50.1
• China Cuts Interest Rates as Slowdown Fears Mount – Financial Times

CFTC Positioning Data:

• EUR shorts at 178,000 vs. 186,000 shorts prior week
• GBP shorts at 21,870 vs. 28,798 shorts prior week
• JPY shorts at 47,512 vs 49,091 shorts prior week
• AUD shorts at 63,154 vs. 53,831 shorts prior week
• CAD shorts at 36,245 vs. 32,842 shorts prior week
• CHF shorts at 5085 vs. 6044 shorts prior week

Markets Update:

Asian equity indices are mostly higher this morning after China cut rates over the weekend to boost growth. The Chinese PMI data beat expectations, both the official and the HSBC release. However, the Aussie Dollar, which usually benefits from positive Chinese economic data, failed to rally as traders increased bets that the RBA will cut rates by 25 bps tomorrow. AUD/USD dropped to a low of 0.7760 overnight and next support is seen at 0.7740. Most analysts see a rate cut as very likely, but if the RBA decides to remain on hold, we could see a large short squeeze in the pair, possibly targeting again the 0.79 level. NZD/USD followed the Aussie lower, but the pair has so far found support at the 0.7520 level. Meanwhile, price action in USD/CAD remains choppy and the pair is currently consolidating around the 1.25 level. The failure to break above 1.2540 suggests we could see some downside pressure in the near-term, with 1.2380 the next bear target.

Upcoming Events:

• 08:15 GMT – Spanish Manufacturing PMI (55.0)
• 08:45 GMT – Italian Manufacturing PMI (50.3)
• 08:50 GMT – French Manufacturing PMI (47.7)
• 08:55 GMT – German Manufacturing PMI (50.9)
• 09:00 GMT – Euro Zone Manufacturing PMI (51.1)
• 09:30 GMT – UK Manufacturing PMI (53.4)
• 13:30 GMT – US Personal Income (0.4 %)
• 13:30 GMT – US Personal Spending (-0.1 %)
• 13:30 GMT – US Core PCE Price Index (0.1 %)
• 13:30 GMT – Canadian Current Account (-C$7.4bln)
• 14:45 GMT – US Manufacturing PMI (54.3)
• 15:00 GMT – US ISM Manufacturing PMI (53.1)

The Week Ahead (Key Data/Events):

Tuesday, March 03^rd

03:30 GMT – RBA Interest Rate Decision (2.00 %)

03:30 GMT – RBA Statement

06:45 GMT – Swiss GDP (0.3 % q/q, 1.7 % y/y)

07:00 GMT – German Retail Sales (0.4 % m/m, 2.6 % y/y)

09:30 GMT – UK Construction PMI (59.0)

13:30 GMT – Canadian GDP

Wednesday, March 04^th

00:30 GMT – Australia GDP (0.7 % q/q, 2.6 % y/y)

08:15 GMT – Spanish Services PMI (56.9)

08:45 GMT – Italian Services PMI (51.4)

08:50 GMT – French Services PMI (53.4)

08:55 GMT – German Services PMI (55.5)

09:00 GMT – Euro Zone Services PMI (57.5)

09:30 GMT – UK Services PMI (57.5)

10:00 GMT – Euro Zone Retail Sales (0.1 % m/m)

13:15 GMT – US ADP Nonfarm Employment Change (220k)

14:45 GMT – US Markit Services PMI

15:00 GMT – US ISM Non-Manufacturing PMI (56.5)

15:00 GMT – Bank of Canada Interest Rate Decision (1.00 %)

Thursday, March 06^th

00:30 GMT – Australia Retail Sales (0.4 %)

12:00 GMT – Bank of England Interest Rate Decision (0.50 %)

12:45 GMT – ECB Interest Rate Decision (0.05 %)

13:30 GMT – ECB Press Conference

13:30 GMT – US Initial Jobless Claims (319k)

15:00 GMT – US Factory Orders (0.3 %)

15:00 GMT – Canadian Ivey PMI (46.2)

Friday, March 07^th

07:00 GMT – German Industrial Production (0.5 %)

08:15 GMT – Swiss CPI (-0.1 % m/m, -0.6 % y/y)

10:00 GMT – Euro Zone GDP (0.3 % q/q, 0.9 % y/y)

13:30 GMT – US Nonfarm Payrolls (240k)

13:30 GMT – US Unemployment Rate (5.6 %)

13:30 GMT – US Average Hourly Earnings (0.2 %)

13:30 GMT – US Trade Balance (-$41.4bln)

13:30 GMT – Canadian Trade Balance (C$0.3bln)

13:30 GMT – Canadian Building Permits (5.5 %)