FXStreet notes that the United States of America is set to release some relatively important data at 13:30 GMT regarding personal income and spending, while the Chicago PMI is expected at 14:45 GMT. Economists at TD Securities forecast the data.
“CPI and PPI data point to an above-trend 0.3% m/m rise in the core PCE index, with the y/y change likely rising to 1.8% from 1.6%. (Core prices rose just 0.04% m/m in January 2019.)”
“We’re also looking for the PCE report to show fairly solid increases in personal income and spending at 0.5% and 0.4% m/m, respectively.”
“We expect the advance indicators release to show a widening of the trade deficit to USD 69.5bn in Jan from 68.3bn before, while we expect UMich's consumer sentiment index to remain largely unchanged in the survey's final release for Feb.”
“We look for the Chicago PMI to rebound to 50 in Feb following Jan's drop to 42.9 — a four-year low.”
FXStreet notes that the Reserve Bank Board (RBA) will meet on March 3 next week and Bill Evans, Chief Economist at Westpac Institutional Bank is not expecting the RBA to remain on hold. AUD/USD trades at 0.6532.
“We expect the cash rate to remain on hold. However, we do confirm our call for a cut from the RBA at the following meeting on April 7.”
“The pricing for a rate cut in April has now reached a 60% probability, however, March pricing is still only around 10% and, given the most recent communications from the RBA, that pricing seems consistent with the likely outcome of the meeting.”
FXStreet reports that haven demand has been the general trend in the FX space. The USD ought to be faring well from a relative macro point of view as the news flow has been worse out of the Euro area but it's not been the case, analysts at Nordea report.
"Going by the latest and official virus numbers, the situation in China is improving from a weak level while Europe is getting worse. Despite this, EUR/USD has been moving higher."
"We think the main driver of this EUR strength is unwind of EUR funded EM carry trades. EUR/USD looks nicely and inversely correlated with the S&P500 future for now."
FXStreet reports that Japan is scheduled to release capital spending data for Q4-2019 on 1 March, to release January household spending data on 5 March and to publish the preliminary Leading Index (LI) for January on 6 March. Economists at Standard Chartered Bank analyze the probable data.
"Excluding software, we believe core capital spending fell 3.3% y/y, roughly in line with the latest business capex reading, which also fell 3% y/y in Q4. Corporate spending likely dropped as Japanese businesses faced weak overseas demand and due to concerns over household spending after the consumption tax hike to 10% (from 8% previously) in October 2019."
"We believe inflation-adjusted household spending fell 5.0% y/y, posting negative growth for a fourth straight month. Of concern, household spending and corporate investment may have remained soft, which is likely to drag down headline GDP growth in 2020."
"We believe the LI fell 1.7% m/m to 90.0, the weakest reading since September 2009. The LI, which tracks key PMI indicators in key markets such as the US, Europe and China, has largely remained in a downward trend since early 2018 on uncertainty over US-China trade tensions and slowing growth in China."
CNBC reports that the United Kingdom is already seeing an economic impact from the coronavirus outbreak, the outgoing Bank of England governor told Sky News.
The outbreak of the new coronavirus, which is believed to have originated in the Chinese city of Wuhan, has spread worldwide and is raising concerns about the global economy.
The British economy, which relies to a large extent on tourism revenues and manufacturing, is already seeing the impact, Mark Carney told Sky News.
"What we are picking up with some of our bigger companies and companies around the world, that is spreading out through the co-called supply chains. So, when they use parts and components to produce goods or, for example, for Jaguar Land Rover in the Midlands, you know, things are getting a little tight," he said.
Data out earlier this month showed that the British economy stagnated at the end of 2019. Car production figures were particularly downbeat in that period, seeing a 1.9% contraction.
Carney, who's due to leave the Bank of England next month, also noted other examples such as a decline in tourism.
"We see it in our streets here in the United Kingdom. That is lower activity as well," he said.
FXStreet reports that until recently gold prices had been rising in tandem with equities and the US dollar, but this week the sell-off in equities has weighed on both the US dollar and gold prices. This positive relationship is quite unusual, according to Georgette Boele from ABN Amro.
"Gold prices have the tendency to weaken when the dollar rises and/or if equity markets rise. This is because gold is non-yielding, i.e. interest on the dollar and dividends from stocks are more attractive than the zero-income alternative of gold."
"The dynamics changed in 2019. Expectations of rate cuts by the Fed and negative yields in the eurozone, Switzerland and Japan have supported gold prices. Not from a safe haven point of view, but because at least gold does not charge a penalty."
"Gold rallied with stocks because at the time it was a risk-on investment. For around 6 months now gold is a crowded trade. Investor positions are around 80% of the annual supply and could come to market at any time when investors change their minds."
"As sentiment has deteriorated, investors have closed some of their open positions in currencies, but most likely also in gold. Therefore, gold prices have failed to make new highs now that equity markets have aggressively sold off. If risk aversion were to result in a market panic, investors will find cash and very liquid assets attractive. They will probably liquidate gold investment positions."
CNBC reports that with cases of the new coronavirus disease rising quickly beyond China, the odds of the outbreak turning into a pandemic have now doubled - from 20% to 40%, Moody's Analytics said in a report.
"Our previous assumption that the virus will be contained in China proved optimistic, and the odds of a pandemic are rising," wrote economists from the research and consultancy arm of Moody's Corporation.
They had earlier predicted a 20% chance of a pandemic, which is defined by the World Health Organization as "the worldwide spread of a new disease."
"The South Korean cases, combined with the spread of new cases in Italy and Iran, indicate that while the spread in China has slowed, the virus is spreading outside of China. And the ease of its spread may bode ill for an acceleration within China as workers return to their jobs and as shops and restaurants begin to reopen," said the Moody's report.
Under Moody's previous assumption that the virus would be contained in China and largely play out by spring, the economists had projected a contraction in the Chinese economy in the first quarter, while the U.S. and global economies will experience a slowdown in growth.
FXStreet reports that the Reserve Bank of Australia (RBA) will have a meeting next month and the Australian Bureau of Statistics will release Q4 GDP data on 4 March. Analysts at Standard Chartered Bank share their forecast.
"We expect the RBA to keep the policy cash rate at 0.75% at its March meeting. Given the RBA's new focus on the unemployment rate and its continued reluctance to cut rates, we expect it to keep rates on hold near-term."
"We still expect two rate cuts, but believe the RBA will wait until April to cut the policy cash rate further, with a second cut in Q3 following the GDP print."
"We maintain our view that the economy requires further stimulus, both monetary and fiscal, to return growth to sustainable trend growth of c.3%."
"Growth likely remained soft at 0.3% q/q, following the 0.4% q/q expansion in Q3; in y/y terms, we estimate a mild improvement to 1.8% y/y."
According to the report from Federal Employment Agency, the number of unemployed fell by 30,000 to 2,396,000 from January to February, which is also due to the mild Winter. Adjusted for seasonal influences, a slight decrease of 10,000 is calculated for February compared to the previous month. Economists had expected an increase by 3,000.
Compared to the previous year, the number of unemployed increased by 23,000. As in January, the unemployment rate is 5.3 percent and has not changed compared to February last year.
Underemployment, which also takes into account changes in labour market policy and short-term incapacity for work, decreased by 10,000 seasonally adjusted on the previous month. Total underemployment in February 2020 was 3,337,000 persons. That was 25,000 more than a year ago.
FXStreet reports that Riksbank and European Central Bank (ECB) are priced to move in tandem over the next two years, strategists at Danske Bank apprise. EUR/SEK is trading at 10.6698.
"There is certainly a resistance in the Riksbank to once again cutting to negative rates. However, we think it is less debatable that the Riksbank has much more room to cut compared to the ECB without significant effects on the banking system and hitting the lower bound."
"The bar for an ECB cut remains very high in our view."
"We think that the RB should be priced more aggressively relative to the ECB."
"We have preferred to express our view on the SEK leg through Ribas rather than in FRAs as 3M forward fixing spreads have tightened and the year-end 3M Stibor fixing in particular remains notoriously volatile."
KOF Economic Research Agency said, the economic barometer rose slightly in February. With the third increase in a row, it now lingers just above its long-term average. Accordingly, clearly positive growth rates would be expected for the Swiss economy in the near future. However, this is based on the sentiment before the outbreak of the coronavirus in northern Italy.
The KOF Economic Barometer rose by 0.8 points in February, from 100.1 to 100.9. Economists had expected a decrease to 97.5. The normalisation towards the region of its long-term mean, which has been observed since December 2019, has thus been confirmed. This development was primarily driven by an improvement in sentiment in the manufacturing sector. Only the indicators from the financial sector had a slightly negative impact. The other indicator groups considered in the Barometer (demand for exports, construction, hospitality, other services and domestic consumer demand) show a practically unchanged picture compared to the previous month.
It should be noted, however, that the majority of the responses to the February KOF business tendency surveys, which have the greatest weight in our barometer, were given before the spread of coronavirus infections in northern Italy became known.
According to the report from Insee, in Q4 2019, GDP in volume terms fell slightly: -0.1%, after +0.3% in Q3 2019. On average over the year, activity slowed down in 2019: +1.2% after +1.7% in 2018.
Household consumption expenditures slowed down slightly (+0.2% after +0.4%), and total gross fixed capital formation decelerated in a more pronounced manner (GFCF: +0.3% after +1.3%). Overall, final domestic demand excluding inventory changes slowed down compared with the previous quarter: it contributed to +0.3 points to GDP growth, after +0.7 points.
Imports fell back this quarter (-0.2% after +0.6%) as well as exports (-0.2% after -0.3%). All in all, the contribution of foreign trade balance to GDP growth was zero, after a negative contribution (-0.3 points) in the previous quarter. Changes in inventories contributed negatively to GDP growth (-0.4 points after -0.1 points).
According to the report from Federal Statistical Office (FSO), turnover adjusted for sales days and holidays rose in the retail sector by 0.6% in nominal terms in January 2020 compared with the previous year. Seasonally adjusted, nominal turnover fell by 0.6% compared with the previous month.
Real turnover adjusted for sales days and holidays fell in the retail sector by 0.1% in January 2020 compared with the previous year. Real growth takes inflation into consideration. Economists had expected a 0.3% increase. Compared with the previous month, real, seasonally adjusted retail trade turnover registered a decline of 0.6%.
Adjusted for sales days and holidays, the retail sector excluding service stations showed a 0.6% decrease in nominal turnover in January 2020 compared with January 2019 (in real terms -0.1%). Retail sales of food, drinks and tobacco registered a decline in nominal turnover of 0.7% (in real terms -0.1%), whereas the non-food sector registered a nominal negative of 0.8% (in real terms +0.2%).
Excluding service stations, the retail sector showed a seasonally adjusted decline in nominal turnover of 1.0% compared with the previous month (in real terms -0.8%). Retail sales of food, drinks and tobacco registered a nominal minus of 0.5% (in real terms -0.2%). The non-food sector showed a minus of 1.3% (in real terms -0.9%).
|00:00||U.S.||FOMC Member Mester Speaks|
|00:01||United Kingdom||Gfk Consumer Confidence||February||-9||-8||-7|
|00:30||Australia||Private Sector Credit, m/m||January||0.2%||0.2%||0.3%|
|00:30||Australia||Private Sector Credit, y/y||January||2.4%||2.5%|
|05:00||Japan||Construction Orders, y/y||January||21.4%||17%|
|05:00||Japan||Housing Starts, y/y||January||-7.9%||-6.1%||-10.1%|
|07:00||United Kingdom||Nationwide house price index, y/y||February||1.9%||2.3%||2.3%|
|07:00||United Kingdom||Nationwide house price index||February||0.5%||0.4%||0.3%|
During today's Asian trading, the US dollar was almost unchanged against the euro. At the same time, the yen rose in price as a "safe haven" asset amid increasing concerns about the negative impact of COVID-19 on the global economy.
According to analysts, there are no signs of slowing down the spread of coronavirus outside China, which pushes investors to transfer funds to protective assets, which, among other things, include the Japanese national currency.
Bank of America lowered its forecast for global economic growth this year to 2.8% from the previously expected 3.1%. This is the lowest growth rate since the financial crisis of 2009. At the same time, China expects economic growth of only 5.2% - at least since 1990. Earlier, the Bank's analysts had expected an increase of 5.6%.
The ICE Dollar index, which shows the value of the dollar against six major world currencies, fell by 0.13% compared to the previous day. Yesterday it fell by 0.5%.
According to the report from Nationwide, UK annual house price growth edges up to 2.3%, the strongest rate for 18 months. On a monthly basis, prices rose by 0.3%, after taking account of seasonal factors. Economists had expected a 0.4% increase.
Commenting on the figures, Robert Gardner, Nationwide's Chief Economist, said: "UK annual house price growth continued to edge higher in February rising to 2.3%, from 1.9% in January - the strongest rate for 18 months.
"While overall economic growth ground to a halt in the final three months of 2019, labour market conditions remained buoyant and borrowing costs low. The decisive election outcome may have provided a boost to buyer sentiment.
"Recent data releases indicate that the housing market has gathered momentum in recent months and the latest house price figures are in line with that trend. The number of residential property transactions and mortgages approved for house purchase increased around the turn of the year and surveyors have reported an increase in new buyer enquiries.
"Looking ahead, economic developments will remain the key driver of housing market trends and house prices. Business surveys suggest that activity recovered in the New Year, but there are still significant uncertainties that threaten to exert a drag on the economy in the coming quarters.
"The global economic backdrop remains challenging, with the coronavirus outbreak expected to weigh on global activity in the coming quarters. Investment is likely to remain subdued until the UK's future global trading relationships become clearer, which is unlikely until early next year.
"Overall, we expect the UK economy to continue to expand at a modest pace in 2020, with house prices remaining broadly flat in 2020 as a whole"
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.1003
Support levels (open interest**, contracts):
- Overall open interest on the CALL options and PUT options with the expiration date March, 6 is 122319 contracts (according to data from February, 27) with the maximum number of contracts with strike price $1,1200 (6281);
Resistance levels (open interest**, contracts)
Price at time of writing this review: $1.2877
Support levels (open interest**, contracts):
- Overall open interest on the CALL options with the expiration date March, 6 is 28208 contracts, with the maximum number of contracts with strike price $1,3050 (3797);
- Overall open interest on the PUT options with the expiration date March, 6 is 30241 contracts, with the maximum number of contracts with strike price $1,2800 (3878);
- The ratio of PUT/CALL was 1.07 versus 1.06 from the previous trading day according to data from February, 27
* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.
** - Open interest takes into account the total number of option contracts that are open at the moment.
|Raw materials||Closed||Change, %|
|Index||Change, points||Closed||Change, %|
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