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The DAX Index is slightly higher in the Thursday session, trading at 11,940.00 in the European session. In economic news, the ECB will set the benchmark rate, which is expected to remain at 0.00%. ECB President Mario Draghi follows with a press conference.

With the markets all abuzz that the Federal Reserve will raise rates next week, the ECB's policy meeting has almost fallen off the radar. The benchmark rate has been pegged at 0.00% since March 2016, and no change is expected at Thursday's meeting. Inflation levels have finally moved higher and eurozone inflation is expected at 2.0% in February, meeting the central bank's inflation target. ECB President Mario Draghi appears comfortable with current monetary policy, although the ECB could tighten its stance if growth and inflation levels continue to point upwards.

The DAX broke above the symbolic 12,000 level last week, but has dipped lower following a capital raise announcement by Germany's Deutsche Bank. The bank has announced a major reorganization, including raising EUR 8 billion by issuing 687.5 million shares on March 21. Deutsche Bank has hit rough waters, and it seemed only a matter of time before it would have to take some drastic measures. In December, the bank reached a $7.2 billion settlement with the U.S. Department of Justice for selling toxic mortgage-backed securities. Deutsche had a dismal 2016, with losses of EUR 1.4 billion. This capital hike is the fourth since 2010, and it remains to be seen if this move will attract investors and help set the bank in the right direction. Deutsche Bank is one of the larger companies on the DAX, so lower share prices this week for Deutsche has weighed on the DAX.

The Federal Reserve waited an entire year to raise rates in December, but appears ready to make a Mach move. The odds of a March hike continue to climb, and are currently at 88% percent, according to the CME Group. Fed policymakers have been dropping hints of a March move, and a red-hot labor market and higher inflation levels present further arguments in favor higher rates. Earlier in the year, the Fed had said that it wanted to wait until it had a clearer idea of President Trump's economic policy before it tightened monetary policy. However, Trump has not backed up his promises to reform the tax code and increase fiscal spending with any details. Some Fed policymakers wanted to raise rates earlier this year, so Fed Chair Yellen is under pressure to make a move, and it appears virtually certain that the Fed will raise rates by a quarter-point on March 15.

Summary: Inflation still heading above the 3% target

Today's CPI inflation figure for China for February surprised sharply on the downside, falling to 0.8% y/y (consensus 1.7% y/y, previous 2.5% y/y).

The decline was due mainly to a big fall in food prices, from 2.7% y/y to -4.3% y/y.

Core CPI (excluding food) also fell slightly, to 2.2% y/y from 2.5% y/y in January. However, the trend is still up (see chart).

It is likely the fall in inflation is due to the end of Chinese New Year and we expect to see a rebound in March.

PPI inflation rose more than expected to 7.8% y/y - the highest rate since 2008. It is more than signalled by commodity prices and suggests pricing power has improved. However, we expect PPI to peak soon.

Weaker CPI inflation implies downside risk to our forecast of two rate hikes in H1. However, as we still see an overshoot of the 3% target in the spring (due to pass-through from PPI), we continue to expect policy tightening.

Core inflation set to overshoot target in H1

CPI inflation still expected to rise above target in H1

PPI and CPI diverging in February. We look for some pass-through to push CPI inflation above 3% during the spring months.

The increase in commodity prices points to an overshoot of the 3% target before too long.

Lower inflation adds downside risk to our forecast of two hikes

Higher inflation needed for PBoC to hike. Our base case is still two hikes in H1, as we look for a rebound in CPI inflation.

So far, China has targeted tightening towards the financial system through tighter liquidity and raising the repo rate by 10bp.

Latest rise in PPI not explained by commodity prices

Rise in PPI inflation not fully explained by commodity prices - this points to broader price pressure.

PMI and monthly momentum has peaked but is still at a fairly high level.

Moderation in commodity prices set to lower inflation pressure

We should be close to a peak...

... if metal prices flatten out as we forecast

Peak in M1 growth also points to a decline in PPI inflation soon

ECB is unlikely to surprise

Notes/Observations

ECB is unlikely to surprise today ahead of high-risk elections despite an improving economic picture

WTI moves back below the $50/barrel following DOE crude inventory build (1st time since Dec)

Overnight:

Asia:

China inflation data diverges (attributed to Lunar New Year distortions); Feb PPI rose for the 6th straight month and to its highest level since Sept 2008 thanks to recent jump in commodity prices while CPI fell m/m for the first time in 4 months, and y/y figure hit a 2-year low

China PBoC said to be planning to apply a stricter method for assessing banks' capital as part of efforts to contain financial sector risks

Europe:

France Harris Poll had Macron (Independent) lead in 1st round (**Note: 2nd in a week that Le Pen had been displaced). 2nd round again saw either Macron or Fillon beating Le Pen

Energy:

Kuwait Oil Min Al-Marzouk: OPEC exceeded pledged cuts in Feb

Economic data

(NL) Netherlands Feb CPI M/M: +0.7% v -0.4% prior; Y/Y: 1.8% v 1.7% prior

(JP) Japan Feb Preliminary Machine Tool Orders Y/Y: 9.1% v 3.5% prior

(CH) Swiss Feb Unemployment Rate: 3.6% v 3.6%e; Unemployment Rate (Seasonally adj): 3.3% v 3.3%e

(FR) Bank of France Feb Business Sentiment (beat): 104 v 102e

(CZ) Czech Feb CPI M/M: 0.4% v 0.3%; Y/Y: 2.5% v 2.4%e

(CN) China Feb M2 Money Supply (miss) Y/Y: 11.1% v 11.4%e; M1 Money Supply Y/Y: 21.4% v 15.7%e, M0 Money Supply Y/Y: 3.3% v 15.0%e

(CN) China Feb New Yuan Loans (CNY): 1.17T v 950Be

(CN) China Feb Aggregate Financing (CNY): 1.15T v 1.45Te

(IT) Italy Jan Bad bank loans €190.7B v €200.9B prior

Fixed Income Issuance:

(IE) Ireland Debt Agency (NTMA) sold total €1.25 vs. €1.0-1.25B indicated range in 2026 and 2045 IGB Bonds

Sold €850M in 1.0% May 2026 IGB bond; Avg Yield: 1.0459% v 0.4951% prior; Bid-to-cover: 1.73x v 2.01x prior

Sold €400M in 2.00% Feb 2045 IGB bonds; Avg Yield: 2.187% v 1.307% prior; Bid-to-cover: 2.00x v 2.07x prior

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 -0.1% at 3,392, FTSE -0.5% at 7,301, DAX -0.2% at 11,939, CAC-40 -0.1% at 4,957, IBEX-35 +0.6% at 9,911, FTSE MIB -0.3% at 19,429, SMI -0.4% at 8,596, S&P 500 Futures flat]

Market Focal Points/Key Themes: European equity indices are trading mixed across the board with the IBEX the outperformer as the Spanish banking sector trades sharply higher in the index; Banking stocks generally providing support across the board; FTSE 100 underperforming with losses in the index led my commodity and mining stocks as copper prices trade sharply lower intraday; Energy stocks also trading lower after API oil weekly inventories overnight showed a larger stockpile causing Brent and WTI contracts to fall sharply; shares of Aviva reversing the insurer sector's recent losses, the notable gainer in the FTSE 100, after releasing its FY16 results and raising its dividend; Asia generally lower overnight despite the Nikkei ending higher.

Upcoming scheduled US earnings (pre-market) include AdvancePierre Foods, Engility Holdings, Ferrellgas Partners, FMSA Holdings, Global Partners, GMS, International Game Technology, NII Holdings, Party City, Signet Jewelers, and Staples.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Carrefour CA.FR -3.9% (final FY16 results), Hugo Boss BOSS.DE -0.1% (Q4 results), Leg Immobilien LEG.DE +1.0% (FY16 results), Royal Unibrew RBREW.DK +5.8% (Q4 results)]

Consumer Staples: [WM Morrison MRW.UK -4.5% (FY16 results)]

Energy: [Premier Oil PMO.UK -1.2% (FY16 results), Uniper UN01.DE +2.2% (FY16 results)]

Financials: [Aviva AV.UK +6.8% (FY16 results, raises div), Hannover Re HNR1.DE -0.7% (FY16 results), Old Mutual OML.UK -2.9% (FY16 results)]

Healthcare: [Merck MRK.DE -3.1% (Q4 results)]

Industrials: [BMW BMW.DE -2.5% (FY16 results), Linde LIN.DE -0.3% (Q4 results, div increase), Schmolz+Bickenbach STLN.CH -1.3% (FY16 results)]

Materials: [Akzo Nobel AKZA.NL +13.3% (Reviewing strategic options to separate Specialty Chemicals; rejects an unsolicited indicative proposal from PPG)]

Technology: [Altran ALT.FR -2.3% (FY16 results), Axel Springer SPR.DE +2.8% (FY16 results), Morphosys MOR.DE -3.4% (FY16 results)]

Utilities: [E.ON EOAN.DE -0.7% (Reportedly made net loss of more than €12.4B in 2016)]

Speakers

German Chancellor Merkelcommented in her Parliament ahead of EU Leader Summit that the EU was facing fundamental decisions about its future. Recent economic developments were more positive for the region; growth prospects were better than thought

German Fin Min Schaeuble: Monetary and fiscal measures have reached their limits. Called for timely start to the end of ECB's loose monetary policy. Must implement bank regulation that was agreed upon at G20 level

German IFO Institute chief Fuest: ECB should scale back its bond buying purchases by a further €10B from April to €50B/month

Scottish First Min Sturgeon (SNP): Autumn 2018 would be a common sense date for any second independence referendum. No final decision had yet been made on holding such vote for any second independence referendum

Turkey Econ Min Zeybekci: Fed decisions seen not impacting domestic rates or TRY currency (Lira)

Japan Chief Cabinet Sec Suga stated that govt expected companies to raise base pay by same amount seen in 2016

China NPC vice chairman Wu Xiaoling reiterates govt stance that fluctuations in exchange rate were normal

China Commerce Ministry (MOFCOM) reiterated govt stance to further improve market-based CNY currency (Yuan) mechanism

Currencies

Dollar held onto its recent gains aided by higher Treasury yields. The upbeat ADP jobs data on Wed has market participants now pricing a 100% probability of a hike in rates by the Fed next week. Dealers added that any further USD strength needed to be driven by expectations of a faster pace of rate hikes in 2018

Focus on ECB rate decision and Draghi press conference later today. EUR/USD was little changed at 1.0550 area just ahead of the NY morning. Dealers noted that it would closely watched for evidence of how the ECB planned to tread the fine line between conveying economic expansion and assuaging fears of near-term tapering. Dealers noted that both economic growth and inflation were both picking up but expected the ECB to resist calls to tighten policy citing potential political risks ahead of several key elections

USD/JPY edged higher by approx. 0.5% towards the 115 neighborhood on yield differentials

Fixed Income:

Bund futures trade at 160.43 down 7 ticks continuing its momentum downwards after yesterday's strong ADP report out of the US. With the ECB rate decision looming support moves to 160.12 followed by 159.86. Resistance moves to 161.06 then 161.59 followed by 162.32 and contract high at 163.12.

Gilt futures trade at 126.50 up 24 ticks moving higher as Cable continues to weaken. Support moves to 126.00 followed by 125.57. Resistance remains at 126.87 followed by 127.35. Short Sterling futures trade flat to down 2bp, in slight steepening trade with Jun17Jun18 spread widening to 13/14bp.

Thursday liquidity report showed Wednesday's excess liquidity rose to €1.356T up €4B from €1.352T prior. Use of the marginal lending facility fell to €111M from €383M prior.

Corporate issuance slowed to $2.95B for the day via 4 issuers headlined by $1.35B 2 part offering from UnitedHealth Group. This puts weekly to $38.7B and Monthly issuance to $52.7B.

Looking Ahead

(UR) Ukraine Feb CPI M/M: 1.0%e v 1.1% prior; Y/Y: 14.2%e v 12.6% prior

05:30 (HU) Hungary Debt Agency (AKK) to sell 12-month Bills - 05:30 (HU) Hungary Debt Agency (AKK) to sell floating rate bonds

05:30 (UK) DMO to sell 0.125% I/L 2036 Gilts

06:00 (IE) Ireland Q4 GDP Q/Q: 1.0%e v 4.0% prior; Y/Y: No est v 6.9% prior

06:00 (IE) Ireland Q4 Current Account: No est v €10.1B prior

06:00 (IL) Israel Q4 Preliminary GDP (2nd reading): No est v 6.2% advance

06:00 (BR) Brazil Mar IGP-M Inflation (1st Preview): 0.1%e v 0.1% prior

07:00 (BR) Brazil CONAB Report

07:00 Czech Central Bank comments on Feb CPI data

07:30 (US) Feb Challenger Job Cuts" No est v 45.9K prior; Y/Y: No est v -38.8% prior

07:45 (EU) ECB Interest Rate Decision: ECB expected to keep key rates unchanged

08:00 (RU) Russia Gold and Forex Reserve w/e Mar 3rd: No est v $393.0B prior

08:15 (UK) Baltic Dry Bulk Index

08:30 (US) Feb Import Price Index M/M: 0.1%e v 0.4%prior; Y/Y: 4.4%e v 3.7% prior

08:30 (US) Initial Jobless Claims: 238Ke v 223K prior; Continuing Claims: 2.06Me v 2.066M prior

08:30 (CA) Canada Q4 Capacity Utilization Rate: 82.5%e v 81.9% prior

08:30 (CA) Canada Jan New Housing Price Index M/M: 0.1%e v 0.1% prior; Y/Y: No est v 3.0% prior

08:30 (US) Weekly USDA Net Export Sales

08:30 (EU) ECB's Draghi post rate decision press conference

08:30 (EU) ECB updates Staff Projections

09:00 (MX) Mexico Feb CPI M/M: 0.6%e v 1.7% prior; Y/Y: 4.8%e v 4.7% prior, Core M/M: 0.7%e v 0.6% prior

10:00 (BR) Brazil to sell 2023 LFT

10:00 (BR) Brazil to sell 2018, 2019 and 2020 LTN Bills

10:30 (US) Weekly EIA Natural Gas Inventories

12:00 (US) Fed reports Q4 Flow of Funds: Household wealth: No est v $1.593T prior

12:00 (US) USDA World Agricultural Supply and Demand Estimates (WASDE) Crop Report

13:00 (DE) German Fin Min Schaeuble speech on global risk to public finances

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

14:00 (AR) Argentina Feb National CPI M/M: 2.1%e v 1.3% prior

USD/CHF - 1.0147

Original strategy :

Buy at 1.0080, Target: 1.0200, Stop: 1.0045

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0080, Target: 1.0200, Stop: 1.0045

Position : -

Target :  -

Stop : -

Although the greenback has rebounded after finding support at 1.0123 yesterday, break of this week’s high at 1.0171 is needed to signal recent erratic rise from 0.9861 low has resumed and extend further gain to 1.0200-10 but near term overbought condition should limit upside to 1.0220-25 and price should falter below previous chart resistance at 1.0248. If said resistance at 1.0171 continues to hold, then further consolidation would take place and risk of another retreat to 1.0123 cannot be ruled out, however, reckon downside would be limited to 1.0100 and support at 1.0173 should hold, bring another rise later.

In view of this, would not chase this rise here and would be prudent to buy dollar on subsequent pullback as support at 1.0073 should limit downside. A drop below 1.0065 support would abort and signal top is formed instead, risk weakness to 1.0040-45 but reckon support at 1.0009 would remain intact. 

GBP/USD - 1.2152

Original strategy :

Sell at 1.2215, Target: 1.2115, Stop: 1.2250

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.2215, Target: 1.2115, Stop: 1.2250

Position : -

Target :  -

Stop : -

As cable has remained under pressure after recent selloff, adding credence to our bearish view that recent decline from 1.2706 is still in progress and may extend further weakness to 1.2110-15, then 1.2090, however, loss of near term downward momentum should prevent sharp fall below 1.2070-75 and price should stay above 1.2050, risk from there is seen for a rebound later.

In view of this, would not chase this fall here and would be prudent to sell cable on recovery as 1.2210-15 should limit upside. Above resistance at 1.2253 would defer and suggest a temporary low is possibly formed instead, risk a stronger rebound to 1.2275-80 but price should falter below resistance at 1.2301 and bring another selloff.

EUR/USD has edged higher in the Thursday session. Currently, the pair is trading at 1.0550. On the release front, the ECB will set the benchmark rate, which is expected to remain at 0.00%. In the US, today's key event is unemployment claims, with the markets expecting the indicator to climb to 239 thousand. On Friday, employment numbers will again be in the spotlight, with the release of Nonfarm Payrolls, Average Hourly Earnings and the unemployment rate.

With speculation heating up that the Federal Reserve will raise rates next week, the ECB's policy meeting has almost fallen off the radar. The benchmark rate has been pegged at 0.00% since March 2016, and no change is expected at Thursday's meeting. Inflation levels have finally moved higher and eurozone inflation is expected at 2.0% in February, meeting the central bank's inflation target. ECB President Mario Draghi appears comfortable with current monetary policy, although the ECB could tighten its stance if growth and inflation levels continue to point upwards.

German numbers have been a mixed bag this week. Industrial Production gained 2.8%, its strongest gain since January 2016. Factory Orders plunged 7.4% in February, much worse than expected. Retail sales, the primary gauge of consumer spending, declined 0.8%, compared to an estimate of 0.2%. This marked a fifth decline of six releases, as the German consumer continues to hold tight to her purse strings. If data from Germany, the Eurozone's largest economy, continues to point downwards, investors could get edgy and drag the euro south towards the 1.05 level.

The Federal Reserve waited an entire year to raise rates in December, but appears ready to make a Mach move. The odds of a March hike continue to climb, and are currently at 88% percent, according to the CME Group. Fed policymakers have been dropping hints of a March move, and a red-hot labor market and higher inflation levels present further arguments in favor higher rates. Earlier in the year, the Fed had said that it wanted to wait until it had a clearer idea of President Trump's economic policy before it tightened monetary policy. However, Trump has not backed up his promises to reform the tax code and increase fiscal spending with any details. Some Fed policymakers wanted to raise rates earlier this year, so Fed Chair Yellen is under pressure to make a move, and it appears virtually certain that the Fed will raise rates by a quarter-point on March 15.

EUR/USD - 1.0560

Original strategy  :

Buy at 1.0515, Target: 1.0625, Stop: 1.0485

Position : -

Target :  -

Stop : -

New strategy  :

Buy at 1.0515, Target: 1.0625, Stop: 1.0485

Position : -

Target :  -

Stop : -

Although the single currency has rebounded after falling to 1.0525, reckon upside would be limited to 1.0600-05 and near term downside risk remains for another decline, however, as broad outlook remains consolidative, reckon downside would be limited to 1.0510-15 and bring another rebound later. Above 1.0600-05 would suggest the fall from 1.0640 has ended, bring further gain to 1.0620, then test of said resistance at 1.0640. Only a break above 1.0640 would extend the erratic rise from 1.0493 low for retracement of early decline to 1.0660-65 (50% Fibonacci retracement of 1.0829-1.0493) and possibly towards resistance at 1.0680 but price should falter well below 1.0700-05 (61.8% Fibonacci retracement).

In view of this, we are looking to buy euro on dips. Below 1.0510 would risk retest of 1.0493 but only break there would shift risk back to the downside and signal recent decline from 1.0829 has resumed for further selloff to 1.0470 and then towards previous support at 1.0454.

News and Events:

ECB to stay quietly on the sidelines

The next week will be very busy in terms of monetary policy with two of the most important central banks holding key meetings. In the US, the Federal Reserve is widely expected to rise its benchmark interest rate next week amid a continuous increase in consumer prices and rising inflation expectations. Across the Atlantic, the ECB has finally glimpsed the results it was hoping for. Indeed, inflation has returned in the Eurozone as the headline measure jumped to 2%y/y in February. As a result, Mario Draghi is already feel the heat from ECB hawks as they push to normalise the central bank’s monetary policy. However, Draghi will most likely stand his ground as switching from dovish to hawkish would be more than counterproductive as it would give a boost to the single currency, which would eventually weigh on price pressure. In addition, the core measure, which excludes the most volatile components such as food and energy, is still stuck below the 1% mark (0.9%y/y in February). Mario Draghi will not hesitate to heavily emphasise that underlying price pressure remains weak.

All in all, Mario Draghi is not yet ready to radically change his tone, preferring instead to wait for further improvement in the Eurozone economy before starting to taper. Moreover, the ECB’s bond purchasing program is slowly reaching its limits as the lack of bonds constitutes a major issue.

Therefore, we do not believe that today's meeting will trigger any trends in EUR crosses. Save your ammo for next week’s FOMC meeting as investors scrutinise the Fed’s forecast.

SNB in a Corner

As everyone knows, the SNB has been intervening to protect the CHF from further “overvaluation". Today, the SNB released data indicating foreign exchange reserves surged 3.8% to 668.2bn CHF (Total balance sheet is over 115% of GDP). While the SNB does not generally comment on intervention, the size of the balance sheet expansion indicates that the SNB has been very active in FX markets (protecting 1.06 soft floor).

The problem is that the pace of purchases is unsustainable (printing unlimited CHF could lead to hyperinflation and credibility issues), yet demand for CHF is likely to increase (1. Rising political risk in Europe 2. EU-CH yield spread stable/narrowing 3. Swiss economic conditions are improving). The language of SNB around FX policy has softened (supported by a positive inflation outlook) adding to speculation of greater flexibility yet clearly demand for CHF has outstripped the SNB's view of smoothing.

EURCHF has become the “go to” trade to hedge European political risk, so selling pressure should increase as we head into the Dutch and French elections. Now I'm sure I don’t have to remind anyone that arguably the two biggest FX moves in the last few years have been created by the SNB (hence the concern), and their proactively addressing events/situation in Europe.

The problem is that, once again, the SNB is now “trapped” by their own policy. My concern is that the SNB's “soft” FX policy has become “hard” in the market's mind. When the SNB is forced to remove the verbiage/physical intervention (not sure which comes first), we should see EURCHF move sharply lower. The longer the situation remains, the greater likelihood of an extreme event.

Today's Key Issues (time in GMT):

• Feb Bank of France Bus. Sentiment, exp 102, last 101, rev 102 EUR / 07:30
• Jan House transactions YoY, last 6,80% EUR / 08:00
• Feb Average House Prices, last 2.916m, rev 2.994m SEK / 08:30
• Schaeuble, Dombret Speak on Challenges for G-20 States, Berlin EUR / 08:30
• Feb Money Supply M2 YoY, exp 11,40%, last 11,30% CNY / 09:00
• Feb Money Supply M1 YoY, exp 16,60%, last 14,50% CNY / 09:00
• Feb Money Supply M0 YoY, exp 15,00%, last 19,40% CNY / 09:00
• Feb New Yuan Loans CNY, exp 950.0b, last 2030.0b CNY / 09:00
• Feb Aggregate Financing CNY, exp 1450.0b, last 3740.0b, rev 3737.7b CNY / 09:00
• Bank of Italy Publishes Monthly Report `Money and Banks' EUR / 10:00
• Mar IGP-M Inflation 1st Preview, exp 0,05%, last 0,10% BRL / 11:00
• mars.03 Foreigners Net Bond Invest, last $258m TRY / 11:30
• mars.03 Foreigners Net Stock Invest, last $51m TRY / 11:30
• Feb Challenger Job Cuts YoY, last -38,80% USD / 12:30
• mars.09 ECB Main Refinancing Rate, exp 0,00%, last 0,00% EUR / 12:45
• mars.09 ECB Marginal Lending Facility, exp 0,25%, last 0,25% EUR / 12:45
• mars.09 ECB Deposit Facility Rate, exp -0,40%, last -0,40% EUR / 12:45
• Mar ECB Asset Purchase Target, exp EU80b, last EU80b EUR / 12:45
• mars.03 Gold and Forex Reserve, last 393.0b RUB / 13:00
• mars.06 CPI WoW, last 0,00% RUB / 13:00
• mars.06 CPI Weekly YTD, last 0,80% RUB / 13:00
• ECB President Draghi Holds Press Conference in Frankfurt EUR / 13:30
• 4Q Capacity Utilization Rate, exp 82,50%, last 81,90% CAD / 13:30
• Jan New Housing Price Index MoM, exp 0,10%, last 0,10% CAD / 13:30
• Feb Import Price Index MoM, exp 0,10%, last 0,40% USD / 13:30
• Jan New Housing Price Index YoY, last 3,00% CAD / 13:30
• Feb Import Price Index ex Petroleum MoM, exp 0,10%, last 0,00% USD / 13:30
• Feb Import Price Index YoY, exp 4,40%, last 3,70% USD / 13:30
• mars.04 Initial Jobless Claims, exp 238k, last 223k USD / 13:30
• Feb 25 Continuing Claims, exp 2062k, last 2066k USD / 13:30
• mars.05 Bloomberg Consumer Comfort, last 49,8 USD / 14:45
• 4Q Household Change in Net Worth, last $1593b USD / 17:00
• Feb Card Spending Retail MoM, exp -0,40%, last 2,70% NZD / 21:45
• Feb Card Spending Total MoM, last 2,50% NZD / 21:45
• Feb Foreign Direct Investment YoY CNY, exp -4,20%, last -9,20% CNY / 23:00

The Risk Today:

EUR/USD is moving lower. Hourly resistance is given at 1.0679 (16/02/2017 high) while hourly support at 1.0521 (15/02/2017 low) has been broken. The technical structure suggests deeper consolidation towards 1.0500. In the longer term, the death cross late October indicated a further bearish bias. The pair has broken key support given at 1.0458 (16/03/2015 low). Key resistance holds at 1.1714 (24/08/2015 high). Expected to head towards parity.

GBP/USD has broken support given at 1.2254 (19/01/2017 low). The road is wide-open for further decline. Hourly resistance is given at 1.2214 (intraday high). The long-term technical pattern is even more negative since the Brexit vote has paved the way for further decline. Long-term support given at 1.0520 (01/03/85) represents a decent target. Long-term resistance is given at 1.5018 (24/06/2015) and would indicate a long-term reversal in the negative trend. Yet, it is very unlikely at the moment.

USD/JPY is showing limited short-terms buying interest after reversing off base lows. Key resistance is given at 115.62 (19/01/2016 high). The technical structure suggests further renewed bearish pressures towards 112.00. We favor a long-term bearish bias. Support is now given at 96.57 (10/08/2013 low). A gradual rise towards the major resistance at 135.15 (01/02/2002 high) seems absolutely unlikely. Expected to decline further support at 93.79 (13/06/2013 low).

USD/CHF continues to improves after testing 1.0021 support. Hourly resistance is implied by upper bound of the uptrend channel. Key resistance is given at a distance at 1.0344 (15/12/2016 high). Expected to see further strengthening. In the long-term, the pair is still trading in range since 2011 despite some turmoil when the SNB unpegged the CHF. Key support can be found 0.8986 (30/01/2015 low). The technical structure favours nonetheless a long term bullish bias since the unpeg in January 2015.

USD/JPY - 114.77

Original strategy  :

Buy at 114.20, Target: 115.20, Stop: 113.85

Position :  -

Target :  -

Stop : -

New strategy  :

Buy at 114.20, Target: 115.20, Stop: 113.85

Position :  -

Target :  -

Stop : -

Yesterday’s rally after finding renewed buying interest at 113.61 signals the rise from 111.69 is still in progress and may extend further gain to previous chart resistance at 114.96, however, break there is needed to signal early erratic rise from 111.59 low has resumed and extend gain towards another previous resistance at 115.38 but price should falter below previous resistance at 115.62, bring retreat later.

In view of this, we are looking to buy dollar on pullback as the Kijun-Sen (now at 114.19) should limit downside and bring another rise later. Below 113.95 support would signal an intra-day top is formed instead, risk weakness towards said strong support at 113.56-61 which is likely to hold from here.

EUR/GBP         –  0.8693

EUR/GBP – The major (A)(B)(C)-(X)-(A)(B)(C) correction from 0.9805 is unfolding and 2nd (A) has possibly ended at 0.6936.

As the single currency has surged again after recent strong rebound from 0.8403 and broke above resistance at 0.8646, signaling the fell from 0.8857 has ended at 0.8403 and consolidation with mild upside bias remains for further gain to 0.8750-60, however, reckon upside would be limited to 0.8800 and price should falter well below said resistance at 0.8857.

Our latest preferred count is that the wave V of a 5-wave series from 0.5682 ended at 0.9805 earlier and major from there has possibly ended at 0.8067 as A-B-C-X-A-B-C. We are keeping our view that the entire correction from 0.9805 has possibly ended at 0.7756 and as labeled as the attached daily chart and impulsive move from 0.9084 has ended at 0.7756 as a 5-waver which marked either the (C) wave or the A leg of (C), a daily close above resistance at 0.8831 would suggest (C) leg has ended and headway towards 0.9084.

On the downside, whilst pullback to 0.8645-50 cannot be ruled out, reckon downside would be limited to 0.8600 and bring another rise later. Below 0.8545-50 would defer and suggest top is formed instead, and risk weakness to 0.8500-10 but break there is needed to provide confirmation and suggest the rebound from 0.8403 has ended.
 
Recommendation: Buy at 0.8600 for 0.8750 with stop below 0.8500.

Euro's long term uptrend started in Feb 1981 at 0.5039 and is unfolding as a (A)-(B)-(C) move with (A): 0.8433 (Feb 1993), (B): 0.5682 (May 2000) and impulsive wave (C) should have ended at 0.9805 with wave III ended at 0.7254 (May 2003), triangle wave IV at 0.6536 (23 Jan 2007) and wave V as well as wave (C) has ended at 0.9805.

We are keeping an alternate count that only wave III ended at 0.9805 and the correction from there is the wave IV and may extend weakness to 0.7700, however, it is necessary to see a daily close above resistance at 0.9143 would change this to be the preferred count.