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The US dollar is mixed at the start of the trading week. The Australian and New Zealand dollars advanced after positive Chinese manufacturing data not points to an expansion. Brexit is weighing down the pound after last week’s third defeat of Prime Minister May’s proposal.

US data this week will give plenty of ammunition to the market to decide if the Fed is right in pausing its monetary policy tightening. After hiking four times in 2018, the central bank has taken off the board interest rate lifts for 2019.

Major central banks have gone dovish with rate cut probabilities rising as global growth fails to gain traction.

The market is kicking off with a healthy dose of risk appetite, but risk events and economic indicators await that could spook investors into seeking safe havens, with the big dollar the preferred destination.

OIL – Oil Rises on Trade Hope and Dollar Softness

Oil is higher at the start of the trading week. The US dollar is softer giving crude some upward momentum. Brexit uncertainty after Prime Minister May’s third attempt to get her proposal through was a failure is on the rise as a long extension could mean the end of the divorce proceedings.

The OPEC+ agreement to limit production has been the stabilizing force despite rising US production. Sanctions on Venezuelan and Iranian exports have reduced supply and lifted prices. Venezuelan exports are set to rise after its largest terminal is back online after an electricity blackout caused it to shut down last week.

The timing couldn’t be worse for the Maduro government as it struggles to remain in power after international support to opposition leader Juan Guaido.

West Texas Intermediate is trading above $60 ahead of a busy week for markets. Energy demand could be impacted if global growth concerns rise again on US-China trade anxiety. So far negotiations appear to be moving ahead, but there are few details on concrete concessions.

GOLD – Gold Flat Ahead of Busy Week

Gold is flat on the start of the Asian session. The yellow metal is trading below the $1,300 price level after geopolitical headwinds shifted and the dollar was the preferred safe haven for investors ahead of the weekend. This week will be filled with macro risk events as Brexit continues to unfold and US economic indicators could validate the Fed’s patient stance

Gold will continue to be attractive as long as a US-China trade agreement and Brexit are not finalized which all scenarios still on the table.

STOCKS – US Indicators and Trade Optimism Driving Markets Higher

Economic data could keep stock markets in the black as forecast are calling from rebounds in several indicators such as retail sales and durable goods. Weather and the effects of the government shutdown made last month’s U.S. non-farm payrolls (NFP) disappoint but a healthy number is expected under normal conditions.

Central banks around the world have turned dovish with interest rate cut probabilities rising across the board. The Fed was pushing for two more rate hikes but has not pumped the brakes as a market sell off and pressure from the White House has made policy makers reconsider.

Global growth remains sensitive to trade headlines, but recently there has been more positive news as US and China appear to be close to deal. Next up will be a visit from the Chinese delegation to Washington.

Oil is higher at the start of the trading week. The US dollar is softer giving crude some upward momentum. Brexit uncertainty after Prime Minister May’s third attempt to get her proposal through was a failure is on the rise as a long extension could mean the end of the divorce proceedings.

The OPEC+ agreement to limit production has been the stabilizing force despite rising US production. Sanctions on Venezuelan and Iranian exports have reduced supply and lifted prices. Venezuelan exports are set to rise after its largest terminal is back online after an electricity blackout caused it to shut down last week.

The timing couldn’t be worse for the Maduro government as it struggles to remain in power after international support to opposition leader Juan Guaido.

West Texas Intermediate is trading above $60 ahead of a busy week for markets. Energy demand could be impacted if global growth concerns rise again on US-China trade anxiety. So far negotiations appear to be moving ahead, but there are few details on concrete concessions

EURUSD bear pressure remains intact as it looks to pressure further lower in the new week. Support comes in at the 1.1200 where a violation will turn risk to the 1.1150 level. A break below here will target the 1.1100 level. Further down, support sits at the 1.1050. Its daily RSI remains weak and vulnerable suggesting further weakness. Conversely, on the upside, resistance resides at 1.1250 level with a break through there opening the door for further upside towards the 1.1.1300 level. Further up, resistance comes in at the 1.1350 level where a violation will expose the 1.1400 level. All in all, EURUSD bear pressure remains intact as it threatens further downside

GBPUSD maintains bear pressure in the short term as it closed lower on Friday. Support stands at 1.3000 level. Further down, support comes in at the 1.2950 level where a break will turn focus to the 1.2900 level. Further down, support lies at the 1.2850 level. Below here will set the stage for more weakness towards the 1.2800 level. On the upside, resistance stands at the 1.3050 with a turn above here allowing for additional strength to build up towards the 1.3100 level. Further out, resistance stands at the 1.3150 level followed by the 1.3200 level. On the whole, GBPUSD maintains bear pressure as it eyes more weakness threats.

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As suggested in the CFTC Commitments of Traders report in the week ended March 26, NET LENGTH in USD Index fell as both speculative long and short positions dropped. NET LENGTH for USD index slipped -650 contracts, to 25 285. All major currencies were in NET SHORT positions. 

Concerning European currencies, NET SHORT for euro futures gained +2 574 contracts to 80 278. Traders trimmed long bets but added shorts. Dovish comments by ECB officials have dented hopes of a stronger single currency. NET SHORT for GBP futures declined -5 192 contracts to 8 582. Speculative long positions jumped +3 481 contracts while speculative shorts dropped -1 711 contracts for the week.On safe-haven currencies, Net SHORT for CHF futures gained +106 contracts to 27 295. NET SHORT for JPY futures gained +2 900 contracts to 62 121 during the week. Bets fell on both sides.On commodity currencies . NET SHORT for AUD futures rose +1 768 contracts to 53 670. Speculative long positions added +2 366 contracts while shorts rose +4 134 contracts. NET SHORT for NZD dropped -922 contracts last week, with both speculative long and shorts position increased last week. NET SHORT for CAD futures declined +8 203 contracts to 39 571.

According to the CFTC Commitments of Traders report for the week ended March 26,  NET LENGTH for crude oil futures jumped +33 873 contracts to 448 619 for the week. Speculative long positions rose +25 989 contracts while shorts plunged -7 884. Crude oil prices strengthened during the week.  For refined oil products, NET LENGTH for gasoline gained +3 971 contracts to 87 399, while NET SHORT  for heating oil dropped -2 761 contracts to 10 202 contracts for the week. NET SHORT for natural gas futures fell -7 289 contracts to 22 946 contracts for the week.

On the precious metal complex, NET LENGTH for gold futures increased, by +31 345 contracts, to 119 741 last week. Speculative long positions rose soared +10 122 contracts, while shorts slumped  -21 223, resulting in a rise in NET LENGTH. For silver futures, speculative long positions added +857 contracts while shorts fell -2 022. These resulted in a jump in NET LENGTH, by -2 879 contracts, to 26 189 contracts. Both precious metals strengthened last week on expectations of a dovish Fed and a decline in global yields.  For PGMs, NET LENGTH of Nymex platinum futures increased +6 626 contracts to 24 207 while that for palladium slid -416 contracts to 12 168.

Official China PMI manufacturing rose to 50.5 in March, up from 49.2 and beat expectation of 49.6. That's firstly the largest monthly rise since 2012. Secondly, it's also the highest level in six months. The improvement from February's 3-yer low suggests stabilization in the slowdown in the sector. PMI non-manufacturing rose to 54.8, up from 54.3, and beat expectation of 54.5 too.

In the release, it's noted the improvement stemmed from post Chinese New Year production recovery and effect of growth stabilization policies. However, overall recovery in market demand is still not apparent. Export orders rebounded while expectations also improved. The positive signals from Sino-US trade negotiations have begun to take effect.

But overall, the statement noted that the current economy is still in a "critical period of stabilization and recovery". And, it is necessary to "further consolidate and enhance confidence recovery, and to restore market demand and stabilize economic growth.

Full release here.

Italy Economy Minister Giovanni Tria said on Sunday that "Italy has been growing in the last 10 years by 1 percentage point less than its European peers, and we are going close to zero as Germany will post a 0.7-0.8 percent increase".

And for Italy, he said "it would be absurd to implement restrictive measures; for sure we don't have space for any expansive fiscal measures."

ECB Governing Council member Klass Knot told German newspaper Handelsblatt that there has been a "cooling off" in the economy. But he emphasized there is "no recession or crisis". Robust demand and wage growth in Eurozone meaned growth would pick up again soon. He, as known hawk, remains in favor of policy normalization ahead.

Knot also saw TLTRO III as a "bridge" to "ease transition to market financing. That is, the new programs conditions will be "less advantageous than before". He noted that ECB should avoid the need on TLTRO IV or V in a few year's time.