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The Euro has been guided by a long and short-term ascending channel against the Canadian Dollar. The exchange rate bounced off the lower boundary of a dominant channel on September 22 and has since remained bullish.

After hitting the 61.80% Fibonacci retracement level, the EUR/CAD made a U-turn north. However, the 55-hour simple moving average was restricting the pair from making a further gain. This retracement can be measured by connecting the low at 1.5523 and the high at 1.6127.

Technical indicators demonstrate that the currency exchange rate could continue to trade upward during the following trading sessions. Nevertheless, traders are advised wait for the pair to breach the aforementioned SMA.

Notes/Observations

Focus on US CPI data but analysts believe it would unlikely alter expectations for Fed policy

Chancellor of Exchequer Hammond (Fin Min): Spring Statement expected to reduce FY issuance for the 1st time since the financial crisis began a decade ago

Asia:

China proposes changes to government departments, ministries and bureaus: to give PBOC some functions currently held by CBRC and CIRC and merge the insurance and banking regulators. Govt giving thr PBoC the power to write the rules for the financial sector (**Note: part of a sweeping overhaul aimed at closing regulatory loopholes and curbing risk in the $43 trillion banking and insurance industries)

RBNZ Acting Gov Spencer: To review macro-prudential policy with Treasury (**Insight: Review could lead to an easing of some restrictions on home loans)

Europe:

Eurogroup Chief Centeno: ESM to approve €5.7B tranche by the end of March for Greece after national approval procedures were completed (as expected); commended Greece for its progress

Euro zone without breakthrough on deposit guarantee despite ECB call. Technical work before the meeting was still under way to agree on a common way of measuring if risks have fallen enough. ECB chief Draghi said to have told EU ministers during the meeting that conditions for the guarantees already existed - Italy Democratic Party Dep Sec Martina said to have ruled out coalition agreements with Five Star and the Centre Right. Would continue to serve citizens, from the opposition, with the role of a parliamentary minority

Americas:

Trump blocks Broadcom takeover of Qualcomm on security risks

CNBC's Larry Kudlow reportedly leading contender to replace White House economic adviser Gary Cohn

Republicans find no evidence of collusion or Russian preference for Trump. The worst the panel uncovered was “perhaps some bad judgment, inappropriate meetings, inappropriate judgment at taking meetings

Economic Data:

(FR) France Q4 Final Private Sector Payrolls Q/Q: 0.4% v 0.3%e; Total Payrolls Q/Q: 0.3% v 0.2%e

(RO) Romania Feb CPI M/M: 0.3% v 0.3%e; Y/Y: 4.7% v 4.7%e

(FI) Finland Jan Final Retail Sales Volume Y/Y: 5.1% v 4.0% prelim

(ES) Spain Feb Final CPI M/M: 0.1% v 0.1%e; Y/Y: 1.1% v 1.1%e

(ES) Spain Feb Final CPI EU Harmonized M/M: 0.1% v 0.1%e; Y/Y: 1.2% v 1.2%e

(ES) Spain Feb CPI Core M/M: 0.3% v 0.1%e; Y/Y: 1.1% v 0.8%e

(HK) Hong Kong Q4 Industrial Production Y/Y: 0.6% v 0.3% prior

(HK) Hong Kong Q4 PPI Y/Y: 3.5% v 3.7% prior

(IT) Italy Q4 Unemployment Rate: 11.0% v 11.0%e (lowest since 2012)

Fixed Income Issuance:

(ID) Indonesia sold total IDR23.45T vs. IDR17T indicated in 3-month, 12-month bills, 5-year,10-year,20-year and 30-year Bonds

(ZA) South Africa sold total ZAR3.3B vs. ZAR3.3B indicated in 2031, 2040, 2044 and 2048 bonds

(ES) Spain Debt Agency (Tesoro) sold total €1.355B vs. €1.0-2.0B indicated range in 3-month and 9-month Bills

(NL) Netherlands Debt Agency ((DSTA) opened book to sell €4.0-6.0B in 0.75% July 2028 DSL Bond vis dutch auction; Guidance seen +16.5-17.5BPS to 0.5% Feb 2028 DSL; order book over €11B

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

Indices [Stoxx600 +0.1% at 379.6, FTSE flat at 7215, DAX +0.2% at 12437, CAC-40 +0.5% at 5301, IBEX-35 +0.8% at 9800, FTSE MIB +0.4% at 22846 , SMI +0.1% at 8979, S&P 500 Futures +0.2%]

Market Focal Points/Key Themes: European Indices trade higher across the board following a mixed session in Wallstreet overnight and mixed markets in Asia. On the corporate front, EON trades higher after results and guidance, with other notable risers including Antofagasta, RWE, Aurubis, Geberit, while Illiad, Hannover Re, Telit and Greencore trade lower after results and updates. Veolia trades lower after the Qatari Diar divested its stake; In the states shares of Qualcomm will be in focus after receiving a presidential order prohibiting Broadcom's proposed takeover. Looking ahead notable earners include Dick Sporting Goods, HD Supply and DSW.

Movers

Consumer Discretionary [ Greencore [GNC.UK] -23% (Profit warnings)]

Industrials [Antofagasta [ANTO.UK] +2.6% (Earnings), Aurubis [NDA.DE] +3.6% (Earnings), Geberit [GEBN.CH] +1.2% (Earnings)]

Financials [ Hannover Re [HNR1.DE] -3.5% (Earnings)]

Telecom [Telit Communications [TCM.UK] -3.4% (Business update), Illiad [ILD.FR] -6.6% (Earnings)]

Materials [Wacher Chemie [WCH.DE] -3.4% (Earnings)]

Utilities [Veolia [VIE.FR] -2.3% (Qatari sovereign wealth developer sell entire stake)] -Energy [RWE [RWE.DE] +0.8% (Earnings), EON [EOAN.DE] +5.6% (Earnings)]

Speakers

ECB's Coeure (France): Cryptocurrencies are poor imitations of money

EU's Juncker stated that he saw an increase urgency in Brexit negotiations and reiterated that PM May must give more clarity. Solid draft text of UK withdrawal pact exists and believed the UK will regret its Brexit decision. Brexit must mean no change for citizens in Irelands and reiterates that the EU stood firm and united on the issue

EU Dombrovskis reiterated the view that EU was prepared to react to US tariffs

EU might avoid US tariffs if certain conditions were met. Exemption could come if EU was considered a reliable partner in addressing over capacity and other criteria

Italy Northern League leader Salvini (euro-skeptic) stated that EU policies were crazy and suicidal but did not foresee any unilateral, improvised exit from the Euro

Italy Northern League official Giorgetti: Likely a 50% change of another election this year - Germany BDI Industry Association: Companies needed to prepare for a hard Brexit

South Africa Fin Min Nene: Need to keep debt at sustainable level. Working towards revising higher GDP growth forecasts. Met with senior Moody's sovereign analyst in London; hard to read their body language. Land expropriation will be handled responsibly but can be abused by populists

Taiwan Central Bank: Domestic inflation seen stable; Jan-Feb CPI being mild. Market liquidity had been ample. TWD currency REER lower than China's Yuan, Korean Won and Singapore Dollar. Real interest rates higher than major economies

Iran said to increase its oil production to repay Chinese investors. Believed that OPEC to agree on the production increase

Currencies

USD was little changed against the major European FX pairs with the focus turning to US CPI data. However analysts believed it would unlikely alter expectations for Fed policy for the time being.

GBP/USD was softer ahead of Chancellor of Exchequer Hammond (Fin Min): Spring Statement but dealers noting the commentary seem more likely to help the gilts as less issuance is expected to be announced for the current fiscal year (thanks to higher tax receipts).

USD/JPY was higher by 0.6% above the 107 area for its best session in 5 months with the USD aided by the US Treasury auction results on Monday that showed the highest 3-year bond yield since 2007. Dealers noted that the Japan’s political situation warranted a close watch as historically the JPY currency tended to trive on political turmoil. Japan Fin Min Aso mighty skip G20 finance minister meeting in Buenos Aires later this month with calls for his resignation following the recent firestorm surrounding the cover-up of the govt land sale

Fixed Income

Bund Futures trade 17 ticks higher at 157.46 ahead of the DMO update on Gilts issuance. Upside targets 157.75, while a return lower targets the155.50 level.

Gilt futures trade at 122.38 up 12 ticks with little reaction to UK Trade and production data. Support continues to stand at 120.75 then 120.15, with upside resistance at 122.85 then 123.35.

Tuesday's liquidity report showed Monday's excess liquidity fell to €1.896T from €1.898T prior. Use of the marginal lending facility stayed steady €0M.

Looking Ahead

(AR) Argentina Central Bank (BCRA) Interest Rate Decision: Expected to leave the 7-Day Repo Reference Rate unchnaged at 27.25%

06:00 (US) Feb NFIB Small Business Optimism: 107.1e v 106.9 prior

06:00 (EU) Daily Euribor Fixing - 06:00 (SI) Slovenia to sell bills

06:00 (IT) Italy Debt Agency (Tesoro) to sell combined €7.25-8.75B in 2020, 2025, 2033 and 2047 BTP Bonds

06:15 (CH) Switzerland to sell 3-month Bills

06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)

06.30 (UK) Weekly John Lewis LFL sales data

06:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills; Avg Yield: % v 0.00%prior; Bid-to-cover: x v 1.71x prior (Mar 6th 2018)

07:00 (TR) Turkey to sell 12.2% Fixed Rate 2023 Bonds; Yield: % v 12.47% prior

07:00 (IE) Ireland Jan Industrial Production M/M: No est v 3.0% prior; Y/Y: No est v 3.0% prior

07:00 (IL) Israel Feb Trade Balance: No est v -$1.4B prior

07:00 (ZA) South Africa Jan Manufacturing Production M/M: 0.2%e v 1.1% prior; Y/Y: 2.5%e v 2.0% prior

07:45 (US) Weekly Goldman Economist Chain Store Sales

07:45 (US) Daily Libor Fixing - 08:00 (IS) Iceland Feb Unemployment Rate: No est v 2.4% prior

08:00 (BR) Brazil Jan Retail Sales M/M: +0.5%e v -1.5% prior; Y/Y: 3.5%e v 3.3% prior

08:00 (BR) Brazil Jan Broad Retail Sales M/M: +0.2%e v -0.8% prior; Y/Y: 6.2%e v 6.4% prior

08:00 (RU) Russia announces weekly OFZ bond auction

08:30 (US) Feb CPI M/M: 0.2%e v 0.5% prior; Y/Y: 2.2%e v 2.1% prior

08:30 (US) Feb CPI Ex Food and Energy M/M: 0.2%e v 0.3% prior; Y/Y: 1.8%e v 1.8% prior

08:30 (US) Feb CPI Index NSA: 248.929e v 247.867 prior; CPI Core Index : 255.749e v 255.287 prior

08:30 (US) Feb Real Avg Weekly Earnings Y/Y: No est v 0.4% prior; Real Avg Hourly Earning Y/Y: No est v 0.8% prior

08:30 (UK) Chancellor of Exchequer Hammond (Fin Min): Spring Statement; to provide govt's half-yearly update of Britain's public finance figures (Debt Management Office expect to cut FY18/19 issuance from £118.7B to £98.2B)

08:55 (US) Weekly Redbook Sales

09:05 (UK) Baltic Dry Bulk Index

10:00 (EU) Weekly ECB Forex Reserves

10:00 (MX) Mexico Jan Industrial Production M/M: 0.4%e v 0.9% prior; Y/Y: 0.4%e v -0.7% prior, Manufacturing Production Y/Y: 2.1%e v -0.1% prior

10:00 (IT) Italy Five Star Part Ledaer Di Maio

10:30 (CA) Bank of Canada (BOC) Gov Poloz

10:45 (UK) BOE APF Gilt purchase operation

13:00 (US) Treasury to sell $13B in 30-Year Bonds Reopening

16:30 (US) Weekly API Oil Inventories

The Australian dollar holds in narrow consolidation under new two-week recovery high at 0.7884, posted after rally of past two days.

The action was capped by 55SMA / Fibo 61.8% of 0.7988/0.7712 descend, with signals that bulls may take a breather here. Strongly overbought slow stochastic supports the notion, but without firmer bearish signal so far.

Strong momentum studies and daily MA’s in bullish configuration, favor further advance. Close above 55SMA / Fibo barrier will be bullish signal for extension towards 0.7923 (Fibo 76.4%).

Meanwhile, the price may hold in consolidation with strong support at 0.7837 (sideways-moving 20SMA) expected to contain and keep bulls intact intact.

Conversely, close below 20SMA would weaken near-term structure and risk return to key support at 0.7817 (daily cloud base).

US CPI data are eyed for fresh signals.

Res: 0.7884, 0.7923, 0.7935, 0.7983
Sup: 0.7856, 0.7837, 0.7817, 0.7798

The pair is up on Tuesday, lifted by higher Nikkei and pressuring again 107 resistance zone, which capped upside attempts in past two days.

Sustained break above 107 (top of congestion that extends into third day) would generate fresh bullish signal for extension of recovery from 105.24 towards tops at 107.67 (27 Feb) and 107.90 (21 Feb) which mark the upper breakpoints.

Lift above 20SMA (106.61) today was bullish signal as broken 10SMA (106.34) holds the downside for the second day.

Momentum RSI turned north and underpin, but overbought slow stochastic could be an obstacle for fresh bulls.

Dips should remain above broken 20SMA to keep bullish near-term bias.

Return below 20SMA would weaken the structure while break and close below 10SMA would generate stronger bearish signal.

Res: 107.43, 107.67, 107.90, 108.48
Sup: 107.00, 106.61, 106.34, 106.15

EUR/USD

Current level - 1.2327

The resistance at 1.2360 should provoke a slide towards 1.2160 lows.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.2360	1.2460	1.2280	1.2160
1.2460	1.2560	1.2160	1.2090

USD/JPY

Current level - 106.84

The intraday bias is positive after the failure at 106.30, for a rise towards 107.60.

Resistance		Support
intraday	intraweek	intraday	intraweek
107.60	108.30	106.30	105.20
108.00	110.40	105.85	102.40

GBP/USD

Current level - 1.3881

My outlook is counter-trend against 1.3930 resistance, for a break through 1.3840 crucial low, towards 1.3710.

Resistance		Support
intraday	intraweek	intraday	intraweek
1.3930	1.4060	1.3840	1.3710
1.3930	1.4280	1.3780	1.3620

Even though income data was lower than expected in the US, the high NFP number suggests wage pressure may be imminent on company earnings in the USA – one of the reasons why the DJI30 was sold yesterday. The price might reject from the POC zone 25054-25240 as we see a strong confluence of technical levels and W 1-2-3 bullish pattern. Point 2 of W pattern sits precisely at M Cm (monthly camarilla level) and should keep the pair supported. However the index needs to make a 4h close above W H3 – 25611 to proceed further up towards 25890-959. Initially, the price might reject from the level. Above 25960, the target is 26388.

A drop below W L4 -24775 and the price might go further down towards the trend line and 24277

W H3 -Weekly Camarilla Pivot (Weekly Interim Resistance)

W L3 - Weekly Camarilla Pivot (Weekly Interim Support)

W H3 - Weekly Camarilla Pivot (Weekly Interim Resistance)

W H4 - Weekly Camarilla Pivot (Strong Weekly Resistance)

M H4 - Monthly Camarilla Pivot (Very Strong Monthly Resistance)

M L3 – Monthly Camarilla Pivot (Monthly Support)

M L4 – Monthly H4 Camarilla (Very Strong Monthly Support)

POC - Point Of Confluence (The zone where we expect price to react aka entry zone)

European Commission President Jean-Claude Juncker in European Parliament on Brexit:-

• "There is increasing urgency to negotiate this orderly withdrawal."
• "As the clock counts down, with one year to go, it is now time to translate speeches into treaties, to turn commitments into agreements."
• "It is obvious that we need further clarity from the UK if we are to reach an understanding on our future relationship."

• Rates: US CPI won't shift thinking about next week's FOMC
  Focus turns to US CPI today. We don't think that the outcome, even in case of a disappointment, will dramatically shift expectations about next week's Fed meeting. Greek bonds could outperform after yesterday's Eurogroup meeting, while SLOVGB's might underperform on the developing political crisis. BTP auctions are a good test for appetite.
• Currencies: Soft ECB speak caps EUR/USD topside
  The dollar was still looking for a clear direction yesterday. Soft ECB comments prevented a sustained rise in EUR/USD. The US CPI takes center stage today. A positive surprise might support the dollar, but it is not sure that this surprise will already come this month. Sterling is trading off recent lows as Brexit is (temporary) off the radar.

The Sunrise Headlines

US stock markets parted ways yesterday with only Nasdaq ending with gains. Risk sentiment on Asian stock markets is mixed overnight with China underperforming (-0.5%).

President Trump blocked Broadcom's $117 bn hostile bid for Qualcomm, capping moves by the Trump administration reflecting concerns about an intensifying arms race between the US and China over advanced technologies.

Slovakia's government edged towards break-up after one of the junior parties in the ruling coalition of PM Fico called for early elections to stem the furore over the murder of an investigative journalist. (FT)

China is merging its banking and insurance regulators and creating a slew of ministries including a new agricultural and rural affairs ministry as part of the biggest government shake-up in years

EMU creditors will disburse new loans to Greece this month and are working on debt relief measures, the head of the Eurogroup Centeno said. Those moves should help strengthen the Greek recovery.

Japan's FM Aso is considering skipping a G-20 finance leaders' gathering in Buenos Aires next week, Japanese media reported, as a suspected cover-up of a cronyism scandal paralyses parliament and puts his job on the line.

Today's eco calendar contains US NFIB small business optimism and US CPI data. The Netherlands, Italy and the US tap the bond market

Currencies: Soft ECB Speak Caps EUR/USD Topside

Soft ECB speak caps EUR/USD topside

Risk sentiment stayed constructive yesterday after Friday's almost perfect payrolls. Still, the dollar didn't find a clear direction. EUR/USD hovered in the lower half of the 1.23 big figure. The topside in EUR/USD is apparently rather well protected as the market assumes that any ECB normalization will develop in a very gradual way. This was confirmed by soft comments from ECB Smets and Coeuré. EUR/USD closed the day at 1.2334. USD/JPY held in the mid 106 area. Overnight, Asian equities are trading mixed. Changes in the major indices are modest. Markets don't give too much weight to the political tensions in Japan. The Nikkei regained initial losses and this ‘propelled' USD/JPY. The dollar also regains a few ticks against the euro. The Aussie dollar is holding near it ST top (0.7875 area) on constructive eco data.

Today, the US NFIB small business confidence is interesting, but the focus will be on the February US CPI data. The consensus expects 0.2% M/M and 2.2% Y/Y (from 2.1%) for headline CPI. The core reading is expected unchanged at 1.8% Y/Y. We don't see much reason for a big positive surprise for the February data. This evening, the US treasury sells 30-yr bonds. Yesterday's sale of 10-y Treasuries was OK. For now, US data don't provide much new guidance for the dollar (and for interest rates) going into the March 21 Fed meeting. We also monitor comments from ECB members. In the wake of last week's ECB meeting (Draghi's comments were perceived soft), comments of ECB's Smets and Coeuré pointed in the same direction. So, ST a further decline in EUR/USD maybe has to come from the euro side of the story, rather than from the USD. Especially as the market is probably still positioned a bit euro long. The US tariffs/trade debate remains a wildcard.

The post ECB price action suggests that the EUR/USD topside is rather well protected. Constructive US eco data might cause a renewed EUR/USD test of the 1.2155 area.

Sterling traded with a cautiously positive bias yesterday. There are again no UK eco data today. Markets keep an eye at Fin Min Hammond's half year public finance update. Less focus on austerity might be a slightly positive for sterling, but it won't be a game-changer. For now there is no trigger for a clear directional move in EUR/GBP. Some further range trading near current levels might be in the cards.

Cable ticked lower in early European trading after holding with narrow range in Asia and remains capped by 20SMA (1.3910) for the fifth straight day.

Bear-trendline off 1.4345 high lies just above (1.3934) and produces additional pressure.

Momentum studies are bullishly aligned but MA’s are mixed and RSI in neutral mode, lacking clearer direction signal.

Strong offers at 1.3910/30 zone keep the downside vulnerable and repeated failure to break higher could spark fresh weakness towards strong support at 1.3782 (daily cloud base).

Bullish scenario requires close above trendline resistance (also Fibo 61.8% of 1.4069/1.3711 bear-leg) to generate bullish signal for extension towards 1.40 zone (daily cloud top / psychological barrier.

UK’s Spring statement is key event for the pound today, as UK Finance Minister Hammond is expected to give more details about economic growth outlook for the Brexit-bound economy.

Also, release of US CPI data, due later today, would give fresh signals.|

Res: 1.3910, 1.3934, 1.3985, 1.4000
Sup: 1.3878, 1.3849, 1.3820, 1.3782

The Euro traded within tight range in Asia on Tuesday with the downside being held by rising 10SMA/top of thick daily cloud (1.2320) and the upside remaining capped for the third straight day by 20SMA (1.2340). Near-term action shows no clear direction as daily studies send mixed signals. Fresh momentum is conflicting mixed MA's and neutral RSI, suggesting the pair needs the catalyst for fresh direction signal. Rising daily cloud continues to underpin the action since the beginning of the month, but fresh upside attempts from 1.2272 (09 Mar low) face strong headwinds from 20SMA and sideways-moving daily Kijun-sen (1.2355). Bulls need firm break here to generate direction signal and spark further recovery of last week's strong fall from 1.2446. Initial negative signals could be expected on close below cloud top/10SMA, to expose 1.2300 support (sideways-moving daily Tenkan-sen) and 1.2272/53 (09 Mar low/rising 55SMA). With thin calendar for the European session, focus turns towards key event of the day, release of US inflation data. Forecasts signal that the CPI would fall in February which could be further blow for expectations of US Fed's more aggressive approach towards interest rates in 2018 and could further depress the greenback.

Res: 1.2340, 1.2355, 1.2380, 1.2400
Sup: 1.2320, 1.2300, 1.2272, 1.2253