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Intermarket:
• SP Futures 4115 (-0.12%)
• EUSTXX 3919 (+0.10%)
• Crude Oil 59.90 (+0.34%)
• US 10YR 1.68% (+0.54%)
• EurUsd 1.1887 (-0.19%)
• UsdJpy 109.72 (+0.32%)
• DAX 15255 (+0.05%)
Equity markets are largely unchanged into Tuesday, as investors await the start of the US earnings season as well as today’s CPI print. The SP500 retreated 0.02% (after Nvidia Corp said it will offer server microprocessors) while VIX remains at the lowest levels since February 2020. Bonds are lower with the 10-year yield up at 1.68% despite the 3- and 10-year bond auctions being well-received. Oil is up; Bitcoin up, close to record of US$61,742.
USD firmer on higher yields ahead of CPI today. Some pointed to the headlines on Biden meeting with bipartisan group of lawmakers, showing willingness to negotiate. However, press reports still highlight taxes as a looming risk for equities. Comments from Fed’s Bullard hinting at tapering timelines being tied to vaccination progress also appear to have supported the USD.
Looking ahead: we get UK’s February GDP, industrial production and trade data; German ZEW survey, and US’ March CPI. Fed’s Harker, Daly, Barkin, Mester, Bostic and Rosengren, as well as ECB’s Villeroy are also speaking today.
Matters that Matter:
• BOJ’s Kuroda: bank will continue monetary easing for long period of time via YCC
• China Mar Trade Balance +$13.8bn from +$37.88bn
• Japan approved the release of wastewater from Fukushima nuclear plant into the sea with green light from US while S.Korea and China concerned
• Trip.com: Retail tranche of Hong Kong listing about 5 times oversubscribed, six local brokers loan more than HKD4.15bn margin financing
• Fed Rosengren: Should be humble about confidence on inflation; take risk of not getting inflation to 2% seriously.
• NZIER: Net 11% of businesses expect economy to deteriorate; NZ business confidence shows modest improvement in Q1
• New Zealand Total Card Spending M/M +2.0% from -3.2%
• UK Mar BRC Like-For-Like Sales Y/Y +20.3% from +9.5%
• US Rep Payne: Biden talked about the importance of Gateway Project; talked about potential 5c gas tax increase
Majors 1-Day View:
USDJPY
- Prices posted an “inside day” on Monday, highlighting a lack of directional momentum. However, buyers returned to the market during Asia trade and signals have improved marginally. As such, we prefer a cautiously bullish stance today.
- Resistance and offers reported at 110.00 and now 109.50
- Support & option related defence at 109.00, stops below.
- US yields supportive into Tuesday.
EURUSD
• Prices posted 2nd little changed close in a row on Monday, as well as the 2nd “inside day” in a row, highlighting a lack of directional momentum. However, sellers have returned to the market during Asia trade, signals weakening marginally. As such, the call is cautiously bearish for today.
• US yields support USD ahead of CPI.
• Support 1.1860/70, resistance now 1.1920s.
AUDUSD
• Prices have remained contained within a broad .7580-.7660 range for the past 10 sessions. As such, directional signals are weak. Prices posted an inside day on Monday, but with sellers returning to market during Asia trade, on balance there is a slight bearish tone going into Tuesday.
• Prices softer on USD strength.
• Offers at .7660s, support .7590 then .7530s.
GBPUSD
• Prices interrupted the sequence of lower daily highs on Monday, with gains of ¾ Big Fig. While the rally is corrective in nature, caution is advised and we prefer to buy towards 1.3690 or sell on a rally towards 1.3800 today.
• Pound resilient ahead of data dump.
• Key levels: 1.3690, 1.3800.
FX Relative ATR Grid
Comment: Volatility retreated on Monday, suggesting caution and a more selective stance going into Tuesday. Presumably markets are waiting for cues from US yields and today’s CPI report.
FX Relative Strength Grid
Comment: the strongest trends are currently CHF (bullish), GBP (bearish). The strongest momentum was seen yesterday in NZD (bearish), CHF (bullish).