Sample Category Title

Volatility compressed ahead of tomorrow's Dutch elections

Asia Mid-Session Market Update: Volatility compressed ahead of tomorrow's Dutch elections, Fed decision/projections/conference, Aussie jobs, and BOJ statement

US Session Highlights

OPEC Monthly Report: Saudi Arabia Feb production rises back above 10M; boosts non OPEC supply growth forecast

(US) FEB PPI FINAL DEMAND M/M: 0.3% V 0.1%E; Y/Y: 2.2% V 1.9%E; Ex Food and Energy M/M: 0.3% v 0.2%e; Y/Y: 1.5% v 1.5%e

(SA) Reportedly Saudi oil production increase in Feb went to domestic storage, not to international oil market - press

US markets on close: Dow -0.2%, S&P500 -0.3%, Nasdaq -0.3%

Best Sector in S&P500: Consumer Discretionary

Worst Sector in S&P500: Energy

Biggest gainers: WU +3.5%, MSI +2.1%, REG +1.8%, GT +1.7%, KIM +1.6%

Biggest losers: FTR -4.7%, UAL -4.7%, CTXS -3.4%, OKE -3.3%, MRO -3.3%

At the close: VIX 12.3 (+1.0 pts); Treasuries: 2-yr 1.38% (flat), 10-yr 2.60% (-1bps), 30-yr 3.17% (-2bps)

US movers afterhours

CLDX Reports Q4 -$0.30 v -$0.34e, R$1.9M v $1.0Me; +3.0% afterhours

AKAO Reports Q4 -$1.04 v -$0.47e, R$10.7M v $11.3Me; -5.9% afterhours

NPTN Reports Q4 $0.13 v $0.08e, R$109.8M v $108Me; Guides Q1 -$0.30 to -$0.20 v $0.05e; -12.0% afterhours

RUBI Reports Q4 $0.37 v $0.26e, R$72.7M v $63.6Me (2 est); Guides Q1 -$0.26 to -$0.22 v $0.05 (adj) y/y; -15.5% afterhours

Politics

(US) MSNBC's Rachel Maddow unveils Pres Trump's 2005 tax returns; Trump paid about $36M on income of about $150M (implies 24%)

(US) FBI Director Comey to disclose whether its probe of Russia interference in Trump's campaign is ongoing tomorrow - press

(NL) Ahead of tomorrow's elections, DPA news citing 3 polls see Netherlands Liberal Party leader and PM Rutte in the lead with expected 24-28 seats in 150-seat Parliament - press

Asia Key economic data:

(AU) AUSTRALIA MAR WESTPAC CONSUMER CONFIDENCE INDEX: 99.7 (4-month high) V 99.6 PRIOR, M/M: 0.1% (3rd straight increase) V 2.3% PRIOR

(NZ) NEW ZEALAND Q4 CURRENT ACCOUNT BALANCE (NZ$): -2.34B V -2.43BE

(KR) South Korea Feb Unemployment Rate: 4.0% v 3.9%e (highest since Sept 2016)

Asia Session Notable Observations, Speakers and Press

Asia indices are down marginally, tracking modest declines in US markers where volumes were extremely light due to massive snowstorms impacting travel in the Northeast. Airlines were the most heavily hit for the 2nd straight day, while auto components and textiles outperformed. Treasuries were slightly higher going into the FOMC and USD majors traded sideways, with tomorrow's anticipated 25bp rate hike priced in and uncertainty building for a more aggressive FOMC statement/dot plots on the heels of better economic data and more hawkish Fed-speak.

Oil prices hovered around 3-month lows in the US session on reports of increased Saudi output, but WTI was up over 1.5% after API inventories showed the first draw in 3 weeks. Saudis also clarified that the increase in Feb went into domestic storage rather than global supply.

Economic data were limited to a slight uptick in Australia's Westpac Consumer Confidence and New Zealand's Q4 Current Account ahead of tomorrow's GDP. Westpac survey determined that consumers have turned more risk averse and also less optimistic about prospects of the property sector.

China Premier Li spoke at length to mark the conclusion of the NPC summit, calling for better relations and more dialogue with US to avoid a trade war that would hurt both sides. Li added the 6.5% 2017 GDP target is ambitious considering external risks, but noted the govt will prioritize employment and avoid large-scale job cuts similar to industry capacity reduction measures late last year. Li reiterated PBOC will keep Yuan stable and proceed with market based reform, adding CNY depreciated due to strong USD rather than China's efforts to devalue Yuan to gain competitive advantage in exports.

China

(CN) China Premier Li: Ties between China and US keep moving forward, optimistic about ties

(CN) China Customs Inspection Chief: China is increasing controls on imports of low quality coal

Japan

(JP) Japan wage increase by top firms for FY17/18 expected to be about 0.3%, the smallest in 4 years - press

Australia

(AU) NAB now sees RBA keeping rates on hold for all of 2017 v 1 rate cut in Nov seen in Feb

Korea

(KR) South Korea Ministry of Strategy and Finance and Korea Customs Service: March daily export turnover estimated above $2B, 17-month high - Korea press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.2%, Hang Seng -0.1%, Shanghai Composite +0.1%, ASX200 -0.1%, Kospi -0.1%

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

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

EUR 1.0600-1.0620; JPY 114.60-114.90; AUD 0.7555-0.7575; NZD 0.6915-0.6940

Apr Gold -0.2% at $1,201/oz; Apr Crude Oil +1.7% at $48.54/brl; May Copper flat at $2.64/lb

(US) Weekly API Oil Inventories: Crude: -0.5M v +11.6M prior (first draw in 3 weeks)

SPDR Gold Trust ETF daily holdings rise 3.0 tonnes to 835.0 tonnes; 2nd straight increase

iShares Silver Trust ETF daily holdings rise to 10,303 tonnes from 10,268 tonnes prior; first rise since Feb 21st

USD/CNY (CN) PBOC SETS YUAN MID POINT AT 6.9115 V 6.9118 PRIOR

(CN) PBOC to inject combined CNY60B v CNY40B prior in 7,14, and 28-day reverse repos

(CN) China MoF sells 7-yr bonds at 3.20% v 3.16%e

(KR) Bank of Korea (BOK) sells KRW2.3T v KRW2.3T offered in 2-yr monetary stabilization bonds; avg yield 1.67% v 1.65% prior

Asia equities / Notables / movers by sector

Consumer discretionary: 753.HK Air China +3.7%, 1055.HK China Southern Airlines +5.0% (Feb result); 669.HK Techtronic Industries +5.8% (FY16 result); 1316.HK Nexteer Automotive Group +6.9% (FY16 result); CKF.AU Collins Foods -2.9% (Canaccord Genuity cuts rating)

Financials: 2378.HK Prudential PLC +3.2% (FY16 result); GPT.AU GPT +2.9% (Credit Suisse raises rating)

Industrials: 7267.JP Honda Motor +0.8% (base salary raise); 5202.JP Nippon Sheet Glass Co -4.5% (Tier 1 firm cuts rating)

Technology: 451.HK GCL New Energy Holdings +1.2% (profit warning); 6502.JP Toshiba Corporation -7.9% (Submits internal controls report to TSE); 6753.JP Sharp Corp -2.1% (press speculates may resume dividends and end domestic TV production); 6146.JP Disco Corp -1.4% (Tokai Tokyo cuts rating)

Materials: FMG.AU Fortescue +6.3% (RBC raises rating); SBM.AU St Barbara -3.9%, RSG.AU Resolute Mining -1.7% (Gold stocks pare gains); 5463.JP Maruichi Steel Tube -3.0% (SMBC cuts rating)

Energy: 916.HK China Longyuan Power Group -5.9% (FY16 result); ORG.AU Origin Energy +0.1% (JPMorgan raises rating)

For the 24 hours to 23:00 GMT, the AUD declined 0.09% against the USD and closed at 0.7558.

LME Copper prices declined 0.8% or $47.0/MT to $5747.0/MT. Aluminium prices declined 1.7% or $31.0/MT to $1851.0/MT.

In the Asian session, at GMT0400, the pair is trading at 0.7569, with the AUD trading 0.15% higher against the USD from yesterday's close.

Early morning data showed that Australia's Westpac consumer confidence index inched 0.1% higher to a level of 99.7 in March, compared to a level of 99.6 in the previous month.

The pair is expected to find support at 0.7544, and a fall through could take it to the next support level of 0.7520. The pair is expected to find its first resistance at 0.7586, and a rise through could take it to the next resistance level of 0.7604.

Moving ahead, Australia's jobs report for February and consumer inflation expectations for March, slated to release in the early hours' tomorrow, will be on investor's radar.

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

For the 24 hours to 23:00 GMT, the EUR declined 0.41% against the USD and closed at 1.0608.

In economic news, German ZEW economic sentiment index rose less-than-expected to a level of 12.8 in March, suggesting that political uncertainty across the common currency region weighed on the outlook for the Euro-zone's largest economy. Market expected the index to rise to a level of 13.0, following a level of 10.4 in the prior month. Further, the nation's ZEW current situation index rose less-than-anticipated to a level of 77.3 in March, following a level of 76.4 registered in the previous month. Meanwhile, the nation's final consumer price index (CPI) advanced 2.2% on an annual basis in February, at par with market expectations and confirming the preliminary estimates. In the previous month, the CPI had climbed 1.9%.

Separately, the Euro-zone's ZEW economic sentiment index jumped to a level of 25.6 in March, after recording a level of 17.1 in the prior month. Additionally, the region's seasonally adjusted industrial production climbed 0.9% on a monthly basis in January, less than market expectations for an advance of 1.3%.

In the prior month, industrial production had fallen by a revised 1.2%.

In the US, the NFIB small business optimism index surprisingly dropped to a level of 105.3 in February, compared to a reading of 105.9 in the prior month, while market participants were anticipating the index to register a level of 106.0. On the other hand, the nation's producer price index rose 0.3% on a monthly basis in February, surpassing market consensus for an advance of 0.1% and following a gain of 0.6% in the prior month.

In the Asian session, at GMT0400, the pair is trading at 1.0615, with the EUR trading 0.07% higher against the USD from yesterday's close.

The pair is expected to find support at 1.0587, and a fall through could take it to the next support level of 1.0560. The pair is expected to find its first resistance at 1.0652, and a rise through could take it to the next resistance level of 1.0690.

Today in the Euro-zone, investors look forward to the Dutch elections. Also, all eyes will be on the US Federal Reserve, as it is expected to announce an interest rate hike at its monetary policy meeting later today. Moreover, the US consumer price inflation and advance retail sales, both for February along with the NAHB housing market index for March, will garner a significant amount of market attention.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the GBP declined 0.49% against the USD and closed at 1.2151.

In the Asian session, at GMT0400, the pair is trading at 1.2162, with the GBP trading 0.09% higher against the USD from yesterday's close.

The pair is expected to find support at 1.2109, and a fall through could take it to the next support level of 1.2055. The pair is expected to find its first resistance at 1.2213, and a rise through could take it to the next resistance level of 1.2263.

Moving ahead, traders will concentrate on Britain's ILO unemployment rate and average earnings data for three months ended January, scheduled to release in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading below its 50 Hr moving average.

For the 24 hours to 23:00 GMT, the USD declined 0.22% against the JPY and closed at 114.68.

In the Asian session, at GMT0400, the pair is trading at 114.83, with the USD trading 0.13% higher against the JPY from yesterday's close.

Earlier today, data showed that Japan's final industrial production fell 0.4% MoM in January, compared to a fall of 0.8% in the flash estimate and following a rise of 0.7% in the previous month.

The pair is expected to find support at 114.48, and a fall through could take it to the next support level of 114.14. The pair is expected to find its first resistance at 115.18, and a rise through could take it to the next resistance level of 115.54.

Looking ahead, market participants await the Bank of Japan's interest rate decision, scheduled in the early hours tomorrow. Markets broadly expect the central bank to keep the monetary policy unchanged.

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 0.21% against the CHF and closed at 1.0093.

In the Asian session, at GMT0400, the pair is trading at 1.0092, with the USD trading marginally lower against the CHF from yesterday’s close.

The pair is expected to find support at 1.0069, 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 1.0111, and a rise through could take it to the next resistance level of 1.0130.

Market participants look forward to Switzerland’s producer and import prices data for February, due in a few hours.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average

For the 24 hours to 23:00 GMT, the USD rose 0.22% against the CAD and closed at 1.3480.

In the Asian session, at GMT0400, the pair is trading at 1.3467, with the USD trading 0.1% lower against the CAD from yesterday's close.

The pair is expected to find support at 1.3438, and a fall through could take it to the next support level of 1.3409. The pair is expected to find its first resistance at 1.3495, and a rise through could take it to the next resistance level of 1.3523.

Ahead in the day, investors will keep a close watch on Canada's existing home sales data for February.

The currency pair is showing convergence with its 20 Hr moving average and trading above its 50 Hr moving average.

Short term Elliott Wave view in EURJPY suggests that the pair has ended the cycle from 2/24 low (118.18) and the instrument is pulling back to correct that cycle before turning higher again. Primary wave ((5)) is currently in progress higher and the rally from Primary wave ((4)) low at 118.18 is unfolding as an ending diagonal Elliott wave structure where Intermediate wave (1) ended at 122.88. The subdivision of Intermediate wave (2) pullback is proposed to be in a double three Elliottwave structure where Minor wave W ended at 121.59 and Minor wave X bounce is in progress.

The subwaves of Minor W looks to be in a zigzag Elliott wave structure, and if the subwaves of Minor Y later also takes the form of a zigzag, then this is a special structure of a double three where the subwave of both wave W and Y unfolds as a zigzag and we can call this structure a double zigzag. Near term, while Minor wave X bounce fails below 122.88 high, pair should turn lower in Minor wave Y of (2) towards 119.97 – 120.53 area before pair resumes the rally higher, provided that pivot at 118.18 low stays intact. We don’t like selling the proposed pullback and expect buyers to appear at above area for at least 3 waves bounce.

EURJPY 1 Hour Chart

Key Points:

• Markets strongly pricing in the risk of a rate hike from the Fed.
• Dollar bulls may be disappointed as Fed likely to be cautious on forward guidance.
• Watch for sharp volatility during the FOMC risk event.

The New Zealand Dollar is bracing itself ahead of the U.S. Fed's FOMC decision but the pair currently remains on a recovery trajectory. In particular, the daily pivot point has proved decisive in containing any further declines and price action has subsequently held around the 0.6931 mark. However, despite a solid NZ current account result of -2.335bn the pair is still at risk from potential FOMC volatility.

The looming Fed interest rate decision poses a sharp risk event to the embattled Kiwi Dollar given the current level of uncertainty over the central bank's medium term direction. Most of the economic forecasts that are floating around seem to suggest that the central bank will hold rates steady at 0.75% during tomorrow's meeting. However, this stands in stark contrast to Bloomberg's survey showing that out of 83 professional economists, only 3 believe that the Fed will hold steady.

Subsequently, there has been a steady pricing in of the risk of a 25bps rate hike, especially given the veritable public relations assault that various FOMC members have been undertaking recently. The central bank has literally done all they can to alter expectations for a rate hike in the lead up to this event. This primarily suggests that Dollar longs will be looking for, not just a rate hike, but some strong signals of a cycle of tightening.

However, given the Fed's predilection for caution, the likely scenario is a 25bps rate hike to the FFR and then a subsequent return to the central bank's key mantra of remaining data dependant. This is unlikely to be enough to satiate the bulls given the current spread of long positions in play. Subsequently, there is a very real risk of market disappointment despite the likely decision to announce a 25bps hike. So don't at all be surprised if the various cross pairs actually rise against the greenback on the day.

Ultimately, the NZDUSD is likely to be volatile, in the lead up to the decision, but rely upon a few key technical levels. In particular, keep a close watch on resistance at 0.6990 as, if there is a disappointing Fed announcement, this will be the key level the pair will need to surmount to cement a move to the upside. On the downside, watch the support zone around 0.6895 as this is the bottom of the recent decline and is also close to the pivot point.

Key Points:

• Near-term downsides are looking likely.
• Long-term head and shoulders could be shaping up.
• Keep an eye on the FOMC meeting.

Despite a slowing rate of decline, gold could have further downsides on offer moving ahead. Specifically, the shift in the metal's technical bias should see it back at around the 1180.00 handle within the next week or so. However, these losses could be hinting at the formation of a long-term chart pattern which might lead to a rather tumultuous future for gold prices.

However, before we get into the long-term forecast, let's take a look at some of the technical arguments for further losses moving forward. For one, the EMA bias provides what could be the clearest indication of further downsides, largely as a result of the recent bearish crossover of the 12, 20, and 100 day moving averages. Additionally, the Parabolic SAR retains a firm bearish bias which should keep selling pressure in place.

If the metal does pull back as forecasted, this could hint at the presence of a long term head and shoulders pattern. If such a pattern is indeed present, this could mean that we see a rally in the immediate aftermath of the coming tumble. This uptick in buying pressure will likely bring gold prices back up to the 1219.34 mark before resistance kicks in. Conveniently, the presence of the 50.0% Fibonacci level and the 100 day EMA around this price will be instrumental in encouraging the right hand shoulder retrace as visualised above.

In the event that this second shoulder forms and confirms the long-term structure, downside risks for gold will spike considerably. In fact, we could have December's low tested once again before we see any meaningful support come into effect. However, it will be worthwhile waiting for that 78.6% Fibonacci level to be broken before pricing in a slip all the way back to the 1128.21 level.

From a fundamental perspective, it's a fairly safe bet to assume gold prices are long-term bullish. Of course, this is a direct result of the US Fed's plan to tighten monetary policy significantly moving ahead. The main uncertainty is exactly when the Fed chooses to begin tightening which is especially pertinent this week given the impending FOMC meeting. However, if we don't see the much talked about hike this week, it will basically assure one for the next meeting which would work well with the above technical forecast.

Ultimately, keep an eye on the metal as it sure to be in focus over the coming weeks. As discussed above, this could see some interesting moves for gold prices which offers much in the way of trading opportunities for both the bulls and the bears out there. Additionally, whilst the FOMC will be one of the major drivers of price, don't forget to keep an eye on political risks in the EU and the standard US economic news.