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Market movers today

The US February jobs report (14:30 CET) will be scrutinised intensively following the recent speculation about the prospect of a Fed hike on Wednesday next week. At the moment, it seems that it would take a significant downside surprise to keep the Fed from hiking. We estimate a non-farm payroll of 190,000, although Wednesday's strong ADP report suggests that risks to this estimate are on the upside. Furthermore, we expect to see some reversal in average hourly earnings after weakness in wages in financial activities dragged them down in January. We estimate average hourly earnings increased by 0.3% m/m and 2.8% y/y in February and that the unemployment level remained at 4.8%.

In the UK, industrial production and construction output in January are due at 10:30 CET. Also, the NIESR GDP estimate for February (16:00 CET) may attract attention, as it has been a fairly reliable estimator of actual GDP growth.

In Scandi markets, inflation data is due today in Denmark and Norway.

Selected market news

Hawkish twist from ECB, despite status quo on policy measures. In line with our macro economists' expectations, the ECB kept all policy measures unchanged and stayed the course on forward guidance. Nonetheless, on the latter, President Mario Draghi said that the Governing Council had considered removing ‘lower levels' from the guidance for the policy rate to ‘remain at present or at lower levels for a considerable period of time'. The staff forecasts on headline inflation were revised higher this and next year, while the ECB lifted its core inflation forecast for 2018 and 2019. Our macro economists see these forecasts as too optimistic, expecting the ECB to lower its core inflation forecasts at a later point in time, and therefore also look for the ECB to extend its QE purchases beyond December. See ECB Review: Hawkish twist but full QE implementation is needed , 9 March 2017.

Stronger EUR and higher German government yields. The market took notice of the slightly hawkish tone from Draghi. EUR/USD strengthened above 1.06 during the meeting, while the 10Y German government bond yield rose 5bp. There were also spill-over effects to Treasuries, which continued to sell off during the US session. The 10Y yield rose some 5bp, rising above the December high and reaching a new three-year peak. US equities were marginally higher, with the S&P500 index closing 0.1% up. This morning, Asian equities are also trading in green territory.

Oil slide continued yesterday. Commodity markets have generally taken a hit this week in preparation for a more hawkish Federal Reserve at the meeting next week. The oil market has been particularly hard hit due to stretched long positioning and possibly some complacency to downside risks following OPEC's re-emergence and a period of low volatility. That caused the price of Brent to drop temporarily below USD52/barrel yesterday – the lowest since before OPEC decided to cut oil output in November last year.

Court unanimous in upholding South Korea President Park impeachment

Asia Mid-Session Market Update: Court unanimous in upholding South Korea President Park impeachment; PBOC officials justify use of reserves to prop up CNY

US Session Highlights

(US) FEB IMPORT PRICE INDEX M/M: 0.2% V 0.1%E; Y/Y: 4.6% V 4.4%E

(US) INITIAL JOBLESS CLAIMS: 243K V 238KE; CONTINUING CLAIMS: 2.06M V 2.06ME

ECB leaves rates and QE targets unchanged, as expected

(EU) ECB’s Draghi: Reiterated view that interest rates to stay low or lower for extended period; Signs that the cyclical recovery may be gaining momentum; risks surrounding euro zone growth outlook have become less pronounced but remain tilted to the downside

ECB raises 2017/2018 GDP and inflation forecasts (inflation stays below 2% target)

US markets on close: Dow flat, S&P500 +0.1%, Nasdaq flat

Best Sector in S&P500: Healthcare

Worst Sector in S&P500: Real Estate

Biggest gainers: SIG +8.7%, MRO +8.1%, FTR +4.4%, NRG +4.0%, EW +3.9%

Biggest losers: SPLS -5.3%, PPG -3.7%, AAL -3.5%, RIG -3.1%, SPG -3.1%

At the close: VIX 12.3 (+0.4pts); Treasuries: 2-yr 1.38% (+1bps), 10-yr 2.60% (+5bps), 30-yr 3.18% (+4bps)

US movers afterhours

PAY Reports Q1 $0.21 v $0.21e, R$457M v $449Me; +0.8% afterhours

ALR Loses in effort to immediately regain Arriva's Medicare billing rights - press; -3.2% afterhours

LOCO Reports Q4 $0.12 v $0.13e, R$92.5M v $90.8Me- Guides initial FY17 $0.65-0.69 v $0.69e, SSS 0-2%; -4.4% afterhours

ULTA Reports Q4 $2.24 v $2.13e, R$1.58B v $1.54Be; Adds $425M to buyback plan (2.5% of market cap); Guides Q1 $1.75-1.80 v $1.80e; R$1.24-1.27B v $1.28Be; -5.0% afterhours

SGRY Reports Q4 $0.35 v $0.20e, R$306.0M v $298Me; Guides initial FY17 EBITDA +10-15% y/y, Rev +9-11% y/y, implies $1.25-1.27B v $1.29Be; -9.8% afterhours

ZUMZ Reports Q4 $0.74 v $0.66e, R$263.6M v $262Me- Guides Q1 -$0.21 to -$0.17 v -$0.03e, R$178-182M v $185Me, SSS 0% to +2%; -14.3% afterhours

FNSR Reports Q3 $0.59 v $0.61e, R$380.6M v $389Me; Guides Q4 $0.50-0.56 v $0.57e, R$360-380M v $389Me; -16.5% afterhours

Politics

(US) Washington State joining Hawaii in requesting that US federal judge bans the latest Executive Order restricting travel from the Middle East - US press

(US) Jon Huntsman accepts Pres Trump's offer to become ambassador to Russia - NY Times

Asia Key economic data:

(JP) JAPAN Q1 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: 1.3 V 3.0 PRIOR; BSI LARGE MANUFACTURING Q/Q: 1.1 V 7.5 PRIOR

(AU) AUSTRALIA JAN HOME LOANS M/M: 0.5% V -1.0%E; 3rd straight increase

(NZ) NEW ZEALAND FEB CARD SPENDING M/M: -0.6% (first decline in 6 motnsh; biggest decline in 22 months) V -0.4%E; TOTAL M/M: -1.0% V 2.5% PRIOR

Asia Session Notable Observations, Speakers and Press

Asian equity indices are markedly higher as more positive sentiment has resurfaced in Asia; Nikkei225 is the best performer, as higher US yields continue to support the greenback at the expense of the Yen; Risk-on flows have also put a bid in US equity futures going into tomorrow's NFP report, as traders bet the risk of a strong print following blow-out ADP numbers earlier this week. USD/JPY was up over 40pips above 115.30, a fresh 6-week high. In other FX majors, AUD/USD and NZD/USD are also higher by some 25pips from the lows, reversing some of the USD-strength driven weakness.

Among key speakers, PBoC Gov Zhou and Dep Gov Yi Gang covered a range of topics at a local conference. Zhou forecast more stability in CNY this year, calling the recent volatility as normal, while also advocating for more open bond market to foreign investment. Zhou also said FX reserves had grown too fast over the past 15 years, and the recent use of funds in normalizing Yuan is acceptable. Dep Gov Yi added China will not devalue Yuan to stimulate exports after this week's surprise trade deficit.

South Korea has taken a big step in normalizing its political situation at a time when extra vigilance is needed to deal with North Korea provocations. South Korea Court Justices unanimously uphold Pres Park's impeachment, and a new election is expected to be held in the next 60 days. Finance officials are closely monitoring for any protracted impact on the markets, while analysts with NAB note the political transition is constructive as candidates for the post are all in favor of reforming the chaebol system.

China

(CN) PBoC Gov Zhou Xiaochuan: Fed factor contributing to volatility in FX; CNY expeted to be stable this year - press

(CN) Goldman Sachs raises China 2017 GDP forecast to 6.6% from 6.5% prior guided

Japan

(JP) According to one survey, analysts are unanimous in expectation for BOJ to leave all policy settings unchanged next week - press

Korea

(KR) South Korea Court Justices unanimously upholds Pres Park impeachment; South Korea to hold a special presidential election within 60 days

(KR) South Korea Finance Ministry: Closely watching financial markets

(KR) NAB: Impeachment ruling for Korea's Pres Park is a positive for Korean stocks - press

Asian Equity Indices/Futures (00:30ET)

Nikkei +1.4%, Hang Seng +0.2%, Shanghai Composite flat, ASX200 +0.6%, Kospi +0.3%

Equity Futures: S&P500 +0.2%; Nasdaq +0.3% Dax +0.1%; FTSE100 +0.1%

FX ranges/Commodities/Fixed Income (00:30ET)

EUR 1.0570-1.0600; JPY 114.90-115.35; AUD 0.7500-0.7525; NZD 0.6890-0.6915

Apr Gold -0.5% at $1,197/oz; Apr Crude Oil +0.6% at $49.61/brl; May Copper flat at $2.58/lb

SLV iShares Silver Trust ETF daily holdings fall to 10,268 tonnes from 10,303 tonnes prior; 11-month low

GLD: SPDR Gold Trust ETF daily holdings fall 2.7 tonnes to 834.1 tonnes; lowest since Feb 9th; 3rd straight decline; Apr Gold extending decline below $1,200; 5-week lows

(CN) PBOC SETS YUAN MID POINT AT 6.9123 V 6.9125 PRIOR; first stronger setting in 4 sessions

(CN) PBoC skips open market operations for 2nd straight session; Drains net CNY110B this week vs CNY280B

(JP) BOJ announces amounts to buy in upcoming QE operation; lowers 1-3-yr JGB purchases to ¥300B from ¥320B

(AU) Australia MoF (AOFM) sells A$600M in 5.75% 2021 Bonds; avg yield: %; bid-to-cover: 5.26x

Asia equities/Notables/movers by sector

Consumer discretionary: TWE.AU Treasury Wine +3.2% (Seeks to maintain earnings margin in Asia); DLX.AU Dulux Group +2.3% (Ellerston initiates holding); RFG.AU Retail Food Group +2.5% (UBs initiates holding)

Consumer staples:090430.KR Amorepacific Corp +0.4% (South Korea court ruling)

Financials: 665.HK Haitong International Securities Group -0.9% (FY16 result); 4.HK Wharf +8.8% (FY16 result, to scrap i-CABLE); 8795.JP T&D Holdings +4.2%, 8750.JP Dai-Ichi Mutual Life Insurance +3.0% (Nomura raises rating)

Industrials: 368.HK Sinotrans Shipping -7.5% (FY16 result); CSR.AU CSR +5.1% (JPMorgan raises rating); 9202.JP ANA Holdings Inc +3.5% (Tier 1 firm raises rating)

Technology: 2038.HK FIH Mobile -1.9% (FY16 result); 6502.JP Toshiba Corporation +1.2% (asset sale consideration); 1097.HK i-Cable Communications -35.5% (Wharf scraps interest); 732.HK Truly International Holdings -13.9% (profit warning)

Materials: JSP.IN Jindal Steel +4.7% (India court rejects pleas on coal block bid); ILU.AU Iluka -1.8% (Gearing likely to remain elevated among increased capex outlook)

Healthcare: NRT.AU Novogen Limited -8.6% (CFO resigns)

For the 24 hours to 23:00 GMT, the AUD declined 0.31% against the USD and closed at 0.7500.

LME Copper prices declined 2.2% or $127.0/MT to $5655.0/MT. Aluminium prices declined 1.8% or $34.0/MT to $1847.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7517, with the AUD trading 0.23% higher against the USD from yesterday’s close.

Early morning data showed that Australia’s seasonally adjusted home loan approvals unexpectedly rose 0.5% MoM in January, confounding market consensus for a fall of 1.0% and following a revised rise of 0.2% in the previous month.

The pair is expected to find support at 0.7494, and a fall through could take it to the next support level of 0.7471. The pair is expected to find its first resistance at 0.7534, and a rise through could take it to the next resistance level of 0.7551.

Next week, investors will await the release of Australia’s unemployment rate, consumer inflation expectations, NAB business confidence and Westpac consumer confidence indices.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the EUR rose 0.36% against the USD and closed at 1.0577, after the European Central Bank (ECB) President, Mario Draghi, struck a more optimistic tone on the Euro-zone’s economic recovery.

The ECB, in its latest monetary policy meeting, left the key interest rate unchanged at 0.00%, as widely expected and pledged to keep its unprecedented stimulus in place at least until the end of the year. In a post meeting statement, the ECB President, Mario Draghi, stated that the governing council does not expect to loosen monetary policy further to prop-up growth and inflation in the common currency region. Additionally, the central bank raised its forecasts for economic growth and inflation for this year and next, and now expects growth of 1.8% in 2017 and 1.7% in 2018, compared with earlier forecasts of 1.7% and 1.6%, respectively. Also, the bank sharply raised its inflation projection for this year to 1.7%, from 1.3% estimated in December.

In the US, data indicated that new claims for jobless benefits advanced more-than-expected to a level of 243.0K in the week ended 04 March 2017, compared to a reading of 223.0K in the previous week, while markets anticipated it to advance to a level of 238.0K. Moreover, the nation’s export price index rose more-than-anticipated by 0.3% MoM in February, compared to a revised gain of 0.2% in the prior month. Also, the import price index increased more-than-estimated by 0.2% on a monthly basis in February, after rising by a revised 0.6% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 1.0594, with the EUR trading 0.16% higher against the USD from yesterday’s close.

The pair is expected to find support at 1.0540, and a fall through could take it to the next support level of 1.0485. The pair is expected to find its first resistance at 1.0632, and a rise through could take it to the next resistance level of 1.0669.

Looking ahead, investors will concentrate on Germany’s trade balance figures for January, scheduled to release in a few hours. Moreover, traders would eye crucial economic releases in the US, consisting of non-farm payrolls and unemployment rate, both for February along with monthly budget statement for February, slated to release later today.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP declined 0.12% against the USD and closed at 1.2153.

In the Asian session, at GMT0400, the pair is trading at 1.2159, with the GBP trading slightly higher against the USD from yesterday’s close.

The pair is expected to find support at 1.2130, and a fall through could take it to the next support level of 1.2102. The pair is expected to find its first resistance at 1.2191, and a rise through could take it to the next resistance level of 1.2224.

Going ahead, market participants will closely monitor UK’s total trade balance as well as industrial and manufacturing production data, all for January, all slated to release in a few hours.

The currency pair is showing convergence with its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.56% against the JPY and closed at 115.08.

In the Asian session, at GMT0400, the pair is trading at 115.18, with the USD trading 0.09% higher against the JPY from yesterday's close.

Overnight data showed that Japan's BSI large manufacturing industries index climbed less-than-expected to a level of 1.1 on a quarterly basis in 1Q 2017, following a gain of 7.5 in the prior quarter.

The pair is expected to find support at 114.60, and a fall through could take it to the next support level of 114.01. The pair is expected to find its first resistance at 115.51, and a rise through could take it to the next resistance level of 115.83.

Investors would shift their attention to Bank of Japan's interest rate decision along with Japan's tertiary industry index and industrial production data, all due next week.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD declined 0.24% against the CHF and closed at 1.0124.

Macroeconomic data revealed that Switzerland's seasonally adjusted unemployment rate remained unchanged at 3.3% in February, meeting market expectations.

In the Asian session, at GMT0400, the pair is trading at 1.0115, with the USD trading 0.09% lower against the CHF from yesterday's close.

The pair is expected to find support at 1.0080, and a fall through could take it to the next support level of 1.0046. The pair is expected to find its first resistance at 1.0155, and a rise through could take it to the next resistance level of 1.0196.

Moving ahead, investors will keep a close watch on Swiss National Bank's (SNB) interest rate decision, due to be announced next week.

The currency pair is trading below its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.13% against the CAD and closed at 1.3509.

On the economic front, Canada's new housing price index advanced 0.1% in January, in line with market anticipations and compared to a similar rise in the prior month.

In the Asian session, at GMT0400, the pair is trading at 1.3498, with the USD trading 0.08% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3473, and a fall through could take it to the next support level of 1.3449. The pair is expected to find its first resistance at 1.3528, and a rise through could take it to the next resistance level of 1.3559.

This afternoon will bring an important Canadian release, namely unemployment rate for February.

The currency pair is trading between its 20 Hr and 50 Hr moving averages.

A clear as day NZD/USD support level to end a busy week for us here in the Vantage FX office.

We had been shorting NZD/USD off this major resistance level, but the question now has to be asked whether the shorts will run out of steam own here.

NZD/USD Daily:

You don’t really get much clearer daily levels than this, with each touch followed by big rejections in both directions.

Interestingly enough, you can see the time that the level was broken right in the middle of that chart, price absolutely hammered through it without even the hint of a pullback.

Levels are there to be broken and just because they have been broken before, doesn’t invalidate them or give reason to ignore them in the future.

NZD/USD Hourly:

Now we wait to see if the higher time frame support level holds and from there we can zoom into the hourly chart and look to long any pullbacks that coincide with short term retests.

Daily Pivots: (S1) 139.19; (P) 139.60; (R1) 140.20; More...

GBP/JPY breached 138.53 support briefly but quickly recovered. As it's staying in range of 138.53/142.79, intraday bias remains neutral first. Price actions from 148.42 are seen as a corrective pattern. Break of 138.53 support will bring deeper decline to 136.44 support and possibly below. However, we'd expect strong support at 50% retracement of 122.36 to 148.42 at 135.39 to bring rebound. On the upside, above 142.79 will turn bias back to the upside for 144.77 and above.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.