Talking Points:
- Euro declines amid pre-positioning for ECB monetary policy announcement
- Australian, Canadian Dollars fall as Yen gains amid risk aversion overnight
- Quiet docket of scheduled event risk puts financial markets in digestion mode
The Euro underperformed in overnight trade. A singular catalyst was not readily apparent, suggesting the move may have reflected pre-positioning ahead of this week’s much-anticipated ECB policy announcement. The central bank is expected to cut the deposit rate by 10bps to -0.4 percent and may increase the size of monthly QE asset purchases.
The single currency corrected higher as traders unwound bets on depreciation over the past week. Indeed, the latest COT positioning report showed speculative net-short exposure fell for the first in eight weeks in the five days through March 1. Within that context, a downswing representing a move toward “neutral” does not seem unreasonable.
The sentiment-linked Australian and Canadian Dollars tracked stocks lower. The MSCI Asia Pacific regional benchmark equity index fell 1 percent in a move that appeared to reflect follow-on momentum from a selloff on Wall Street. The anti-risk Japanese Yen traded higher against most of its major counterparts, although the benchmark USD/JPY cross traded little-changed on the session.
Looking ahead, a quiet economic calendar in European trading hours offers little by way of scheduled event risk to shape price action. That seems likely to make for a digestive tone, with markets in retracement mode until the next round of high-profile news-flow by way of the BOC and RBNZ rate decisions crosses the wires.
Losing money trading the FX market? This might be why.
Asia Session
| GMT | CCY | EVENT | ACT | EXP | PREV |
|---|---|---|---|---|---|
| 21:45 | NZD | Card Spending Retail (MoM) (FEB) | 0.7% | 0.3% | 0.4% |
| 21:45 | NZD | Card Spending Total (MoM) (FEB) | -0.1% | - | 0.6% |
| 23:30 | AUD | Westpac Consumer Conf Index (MAR) | 99.1 | - | 101.3 |
| 23:30 | AUD | Westpac Consumer Conf SA (MoM) (MAR) | -2.2% | - | 4.2% |
| 23:50 | JPY | Money Stock M2 (YoY) (FEB) | 3.1% | 3.2% | 3.2% |
| 23:50 | JPY | Money Stock M3 (YoY) (FEB) | 2.5% | 2.6% | 2.6% |
| 00:30 | AUD | Home Loans (MoM) (JAN) | -3.9% | -3.0% | 2.7% |
| 00:30 | AUD | Investment Lending (JAN) | -1.6% | - | -0.1% |
| 00:30 | AUD | Owner-Occupier Loan Value (MoM) (JAN) | -4.3% | - | -0.2% |
| 06:00 | JPY | Machine Tool Orders (YoY) (FEB P) | - | -17.2% |
European Session
| GMT | CCY | EVENT | EXP | PREV | IMPACT |
|---|---|---|---|---|---|
| 09:00 | GBP | BOE's Bailey Speaks in London | - | - | Low |
| 09:30 | GBP | Industrial Production (MoM) (JAN) | 0.4% | -1.1% | Medium |
| 09:30 | GBP | Industrial Production (YoY) (JAN) | 0.0% | -0.4% | Medium |
| 09:30 | GBP | Manufacturing Production (MoM) (JAN) | 0.2% | -0.2% | Medium |
| 09:30 | GBP | Manufacturing Production (YoY) (JAN) | -0.7% | -1.7% | Medium |
Critical Levels
| CCY | Supp 3 | Supp 2 | Supp 1 | Pivot Point | Res 1 | Res 2 | Res 3 |
|---|---|---|---|---|---|---|---|
| EUR/USD | 1.0893 | 1.0957 | 1.0984 | 1.1021 | 1.1048 | 1.1085 | 1.1149 |
| GBP/USD | 1.4018 | 1.4120 | 1.4167 | 1.4222 | 1.4269 | 1.4324 | 1.4426 |
--- Written by Ilya Spivak, Currency Strategist for DailyFX.com
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