Dollar continues to ride on speculation of March rate hike and positive response to president Donald Trumps’ Congress address. Released from US, personal income rose 0.4% in January while spending rose 0.2%. Headline PCE accelerated to 1.9% yoy but missed expectation of 2.0% yoy. Core PCE was unchanged at 1.7% Yoy, below expectation of 1.8% yoy. ISM manufacturing will be a key piece of data to look at and strong reading could give Dollar’s rally more fuel. Fed will also release Beige Book economic report in the afternoon. For the time being, the greenback will like stay firm. Technically, 1.0493 support in EUR/USD and 114.94 resistance in USD/JPY should be watched.
Dollar index resumes rebound
Dollar index jumps to as high as 101.88 so far today and the break of 101.79 resistance indicates resumption of whole rebound from 99.23. Further rise should be seen back to retest 103.82 high. At this point, there is no clear sign of up trend resumption yet. Therefore, we’d be cautious on topping around there. But, as the index depended 99.11/43 support zone, the medium term up trend is expected to resume sooner rather than later. Meanwhile, on the downside, break of 100.66 minor support will turn focus back to 99.23 instead.
UK PMI manufacturing missed expectation
UK PMI manufacturing dropped to 54.6 in February, down from 55.9, and missed expectation of 55.7. Nonetheless, Markit noted that "the UK manufacturing sector continued its solid start to the year." And, "although rates of expansion in output and new business lost impetus in February, growth remained comfortably above the long-run averages. The survey is signalling quarterly manufacturing output growth close to the 1.5 per cent mark so far in the opening quarter which, if achieved, would be one of the best performances over the past seven years." Also from UK, mortgage approvals rose to 69.9k in January while M4 money supply rose 0.9% mom. BR shop price index dropped -1.0% yoy in February.
Also from Europe, Swiss SVME PMI rose to 57.8 in February, above expectation of 55.5. UBS consumption indicator rose to 1.43 in January. Eurozone PMI manufacturing was revised lower by 0.1 to 55.4 in February. Germany PMI manufacturing was reviewed lower to 56.8 while France PMI manufacturing was revised down to 52.2. Italy PMI manufacturing rose to 55.0 in February. From Germany, unemployment dropped -14k in February while unemployment rate was unchanged at 5.9%. German CPI accelerated to 2.2% yoy in February
China PMI manufacturing solid
The official China PMI manufacturing rose to 51.6 in February, above expectation of 51.2. PMI non-manufacturing dropped to 54.2. Caixin PMI manufacturing rose to 51.7. Zhengsheng Zhong, Director of Macroeconomic Analysis at CEBM Group, said in the release that "the Chinese manufacturing economy continued to recover in February. But it is premature to jump to the conclusion that the recovery is entrenched." And, "the second quarter is likely a key period to look at for future trends."
Elsewhere, Australia GDP grew 1.1% qoq in Q4, above expectation of 0.7% qoq. New Zealand terms of trade rose 5.7% qoq in Q4. Japan capital spending rose 3.8% in Q4.
GBP/USD Mid-Day Outlook
Daily Pivots: (S1) 1.2345; (P) 1.2408; (R1) 1.2442; More…
GBP/USD’s sharp fall today and break of 1.2346 indicates that rebound from 1.1986 has completed at 1.2705 already. Intraday bias is turned back to the downside for retesting 1.1946/86 support zone. The consolidation pattern from 1.1946 has possibly completed at 1.2705 too. Break of 1.1946 will confirm our bearish view and resume the larger down trend. Nonetheless, on the upside, above 1.2478 minor resistance will delay the bearish case and turn bias neutral first.
In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.
Economic Indicators Update
|21:45||NZD||Terms of Trade Index Q/Q Q4||5.70%||4.00%||-1.80%||-1.10%|
|23:50||JPY||Capital Spending Q4||3.80%||0.60%||-1.30%|
|00:01||GBP||BRC Shop Price Index Y/Y Feb||-1.00%||-1.40%||-1.70%|
|00:30||AUD||GDP Q/Q Q4||1.10%||0.70%||-0.50%|
|01:00||CNY||Manufacturing PMI Feb||51.6||51.2||51.3|
|01:00||CNY||Non-manufacturing PMI Feb||54.2||54.6|
|01:45||CNY||Caixin PMI Manufacturing Feb||51.7||50.8||51|
|07:00||CHF||UBS Consumption Indicator Jan||1.43||1.5||1.5||1.38|
|08:30||CHF||SVME PMI Feb||57.8||55.5||54.6|
|08:45||EUR||Italy Manufacturing PMI Feb||55||53.5||53|
|08:50||EUR||France Manufacturing PMI Feb F||52.2||52.3||52.3|
|08:55||EUR||Germany Manufacturing PMI Feb F||56.8||57||57|
|08:55||EUR||German Unemployment Change Feb||-14K||-10k||-26k|
|08:55||EUR||German Unemployment Rate Feb||5.90%||5.90%||5.90%|
|09:00||EUR||Eurozone Manufacturing PMI Feb F||55.4||55.5||55.5|
|09:30||GBP||PMI Manufacturing Feb||54.6||55.7||55.9||55.7|
|09:30||GBP||Mortgage Approvals Jan||69.9k||68.5k||67.9k||68.3k|
|09:30||GBP||M4 Money Supply M/M Jan||0.90%||-0.10%||-0.50%|
|13:00||EUR||German CPI M/M Feb P||0.60%||0.60%||-0.60%|
|13:00||EUR||German CPI Y/Y Feb P||2.20%||2.10%||1.90%|
|13:30||USD||Personal Income Jan||0.40%||0.30%||0.30%|
|13:30||USD||Personal Spending Jan||0.20%||0.30%||0.50%|
|13:30||USD||PCE Deflator M/M Jan||0.40%||0.50%||0.20%|
|13:30||USD||PCE Deflator Y/Y Jan||1.90%||2.00%||1.60%|
|13:30||USD||PCE Core M/M Jan||0.30%||0.30%||0.10%|
|13:30||USD||PCE Core Y/Y Jan||1.70%||1.80%||1.70%|
|15:00||CAD||BoC Rate Decision||0.50%||0.50%|
|15:00||USD||ISM Manufacturing Feb||56||56|
|15:00||USD||ISM Prices Paid Feb||68||69|
|15:00||USD||Construction Spending M/M Jan||0.60%||-0.20%|
|15:30||USD||Crude Oil Inventories||0.6M|
|19:00||USD||Fed Beige Book|