It has been a positive start to the new trading week as Asian markets recorded gains across the board. Major US indices on Friday fell for five straight days. In Japan, the Nikkei225 main index added 0.47 percent to 21,125 and the Hang Seng benchmark in Hong Kong gained 0.59 percent at 28,393. The Shanghai Composite rising 0.96 percent at 2,998, while The Aussie stockmarket finished 0.40 percent lower to 6263.
In commodities markets, the Crude oil gains 60 cents to $ $56.65/barrel while Brent oil is 48 cents higher to $65.95/barrel. Gold is trading flat at $1298 after Fridays ten dollar rally. The precious metal price may find support at $1280 ahead of testing the 100-day simple moving average down to $1265. The yield on 10-year Treasuries held at 2.6393 percent.
On the Lookout: The Japan February preliminary machine tool orders came at -29.3% vs. -18.8% prior. The German government is said to now expect 2019 GDP growth of 0.8% The previous revision to their growth forecast for the economy stood at 1.0% for 2019 from 1.8% last.
In our trading calendar during the Wall Street session, the US retail sales data will be published at 12:30GMT. BOE MPC member Haskel’s speech will be closely followed at 13:00GMT. The US traders may receive some fresh trading impetus from the US President Trump’s budget release at 15:30GMT.
UK GDP for January will be released Tuesday with the expectations for 0.2% vs. -0.4% last month. US durable goods orders for January will be released on Wednesday.
In Central Banks events for the week, we have Fed’s Powell speak on Monday at 12:00GMT. On Tuesday, March 12 Speech by Reserve Bank Deputy Governor Guy Debelle. Thursday, the BOJ is expected to keep rates unchanged. Kuroda speaks as well and focus will be on whether he signals the potential for more easing due to lower growth and inflation expectations.
Trading Perspective: In forex markets, the Aussie dollar is adding some pips and currently trading at the daily highs to 0.7041, while the Kiwi regained the 0.68 level amid US dollar weakness. The US dollar index has now established a trading range between 97 and 97.70.
GBPUSD: Brexit concerns returned to FX markets amid increased odds of the PM Theresa May’s Brexit deal rejection by the UK lawmakers ahead of Tuesday meaningful vote. The Cable in Asian trading session broke below the 1.3000 level and reached three-week lows near 1.2957.
It will be a busy Brexit Calendar this week, here are the main events
- 12th March – Next “meaningful vote” on Brexit in UK Parliament
- 13th March – Parliamentary vote on opposing “no deal” exit option
- 14th March – Parliamentary vote on extending negotiations/Article 50
- 21st – 22nd March – EU Leaders’ Summit
- 29th March – Article 50 end date
- 9th May – European Council (heads of state) meeting
- 18th – 23rd May – EU Parliamentary elections
- 20th – 21st June EU Leaders’ Summit
GBPUSD during Asian session breached the all-important 50 and 200-day moving averages deteriorating the long term technical picture, now a test of the 100-day moving average at 1.2885 looks possible as we enter a volatile week for the pair.
In sterling futures market traders scaled back their open interest positions by just 602 contracts on Friday from the previous session, clinching the seventh drop in a row. On the other hand, volume rose for the second consecutive day, this time by around 66.4K contracts.
EURUSD started the week higher at 1.1242 area in an attempt to stabilize after last week’s heavy losses amid the backdrop of economic and political uncertainty in the Eurozone. The pair must reenter the two-month trading range lower band at 1.1240 in order to scare bears away.
The open interest in Euro futures market shrunk by more than 4.1K contracts on Friday, from Thursday’s final 549,347 contracts. In the same line, volume dropped significantly by nearly 151K contracts.
USDJPY is adding 30 pips in early European session catching some bids around 111.20 in an attempt to turn the momentum to bullish mode. A break above the 100-day moving average at 111.40 can open the way for the upper bound in the recent trading range at 112.
In JPY futures markets open interest shrunk by around 12.1K contracts after three consecutive daily builds. On the other hand, volume increased for yet another session, this time by almost 36.8K contracts.