Talking Points:

  • Markets likely to be more responsive to upbeat vs. disappointing UK PMI data
  • Strong results on 5-year UK bond sale hints traders looked past “Brexit” fears
  • Yen fell as Aussie, NZ Dollars rose amid risk appetite recovery in Asian trade

UK PMI data headlines the European data docket. The catch-all Composite index is expected to show the pace of manufacturing- and service-sector activity growth slowed in February after hitting a six-month high in January.

Soft factory-sector and construction PMIs earlier in the week failed to stymie a British Pound recovery. The currency posted the latest daily gain versus the US Dollar in a month in yesterday’s trade after demand rose and yields declined at an auction of five-year bonds, pointing to investors’ confidence despite the looming “Brexit” referendum.

This coupled with an already steep slide in the priced-in BOE rate hike outlook and build-up in speculative net-short exposure is likely to make the UK unit relatively resilient in the face of negative news flow. Alternatively, an upside surprise may fuel unwinding of short GBP positioning, extending the currency’s recovery.

The anti-risk Japanese Yen underperformed while the sentiment-geared Australian and New Zealand Dollars traded higher alongside Asian stock markets as the markets’ mood brightened in overnight trade. The MSCI Asia Pacific regional benchmark equity index rose 0.8 percent.

Losing Money Trading Forex? This Might Be Why.

Asia Session

GMT

CCY

EVENT

ACT

EXP

PREV

21:45

NZD

Value of All Buildings SA (QoQ) (4Q)

2.5%

2.0%

0.7%

22:30

AUD

AiG Perf of Services Index (FEB)

51.8

-

48.4

00:00

NZD

ANZ Commodity Price (FEB)

0.4%

-

-2.3%

00:30

AUD

Trade Balance (JAN)

-2937M

-3200M

-3524M

01:30

JPY

BOJ Nakaso speaks in Naha

-

-

-

01:45

CNY

Caixin China PMI Services (FEB)

51.2

-

52.4

01:45

CNY

Caixin China PMI Composite (FEB)

49.4

-

50.1

02:00

JPY

Nikkei Japan PMI Services (FEB)

51.2

-

52.4

02:00

JPY

Nikkei Japan PMI Composite (FEB)

51.0

-

52.6

European Session

GMT

CCY

EVENT

EXP

PREV

IMPACT

07:00

GBP

Nationwide House Px (MoM) (FEB)

0.4%

0.3%

Medium

07:00

GBP

Nationwide House Px (YoY) (FEB)

4.9%

4.4%

Medium

08:30

GBP

Halifax House Prices (MoM) (FEB)

0.0%

1.7%

Low

08:30

GBP

Halifax House Price (3M/Y) (FEB)

10.4%

9.7%

Low

08:45

EUR

Markit/ADACI Italy Services PMI (FEB)

52.8

53.6

Low

08:45

EUR

Markit/ADACI Italy Composite PMI (FEB)

-

53.8

Low

08:50

EUR

Markit France Services PMI (FEB F)

49.8

49.8

Low

08:50

EUR

Markit France Composite PMI (FEB F)

49.8

49.8

Low

08:55

EUR

Markit Germany Services PMI (FEB F)

55.1

55.1

Medium

08:55

EUR

Markit/BME Germany Composite PMI (FEB F)

53.8

53.8

Medium

09:00

EUR

Markit Eurozone Services PMI (FEB F)

53.0

53.0

Medium

09:00

EUR

Markit Eurozone Composite PMI (FEB F)

52.7

52.7

Medium

09:30

GBP

Official Reserves Changes (FEB)

-

$527M

Low

09:30

GBP

Markit/CIPS UK Services PMI (FEB)

55.1

55.6

High

09:30

GBP

Markit/CIPS UK Composite PMI (FEB)

55.7

56.1

High

10:00

EUR

Eurozone Retail Sales (MoM) (JAN)

0.1%

0.3%

Medium

10:00

EUR

Eurozone Retail Sales (YoY) (JAN)

1.3%

1.4%

Medium

Critical Levels

CCY

Supp 3

Supp 2

Supp 1

Pivot Point

Res 1

Res 2

Res 3

EUR/USD

1.0748

1.0803

1.0836

1.0858

1.0891

1.0913

1.0968

GBP/USD

1.3673

1.3851

1.3964

1.4029

1.4142

1.4207

1.4385

--- Written by Ilya Spivak, Currency Strategist for DailyFX.com

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