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Wednesday March 27: Five things the markets are talking about

Global equities traded mixed overnight as investors deal with some disappointing economic signals this month, along with a plethora of central banks decisively turning towards accommodation, shying away from rate normalization for the foreseeable future.

A number of sovereign yields have plummeted to new year lows while risk aversion trading strategies have tended to dominate proceedings as U.S/China trade talks (Mar 28/29) remain a focus along with U.Ks Brexit next steps. U.S recessions fears are being stoked by the inversion of U.S three-month bill rates and the benchmark U.S 10-year note curve.

Today’s proceedings will be dominated by the U.Ks House of Commons who are attempting to break its Brexit deadlock with votes on alternatives to PM May’s divorce deal with the EU.

There are potentially eight Brexit options the U.K. parliament could vote on:

• To exit without a deal;
• Sign a deal similar deal to the one Canada has;
• Request a long extension to Article 50;
• Accept PM Theresa May’s deal;
• Remain in the customs union;
• Stay in the single market;
• Hold a second referendum;
• Or revoke Article 50.

On tap: CAD trade balance & NZD business confidence (Mar 27), U.S final GDP (Mar 28), GBP current a/c, CAD GDP (Mar 29).

1. Stocks mixed results

In Japan, the Nikkei fell overnight, pressured by companies going ex-dividend. The Nikkei share average ended down -0.2%, while the broader Topix dropped -0.5%. The Japanese market has been very volatile this week, tumbling -3% Monday and rebounding yesterday. Investor sentiment has been hit hard by fixed income concerns about a possible U.S economic recession due to the partial inversion of the U.S yield curve.

Down-under, Kiwi shares rallied to a record high overnight after the Reserve Bank of New Zealand (RBNZ) blindsided the market by raising the possibility of a rate cut as its next move (see below), while in Australia the materials sector helped its market eke out modest gains. New Zealand’s benchmark S&P/NZX 50 index climbed +1.3%, while in Australia, the S&P/ASX 200 index inched about +0.1% higher at the close. In S. Korea, the Kospi index fell, as foreigners booked profit from the previous session. The index ended down -0.15%.

In China and Hong Kong, stocks closed higher following two straight sessions of losses, as a rebound Tuesday stateside aided investor sentiment, while weak industrial profit data fuelled hopes for more stimulus. The blue-chip CSI300 index ended up +1.2%, while the Shanghai Composite Index gained +0.9%. In Hong Kong, the Hang Seng advanced +0.6%.

In Europe, regional indices are trading mixed, following on from another mixed session in Asia overnight and higher U.S futures this morning.

U.S stocks are set to open in the ‘black’ (+0.20%).

Indices: Stoxx600 +0.11% at 377.62, FTSE +0.14% at 7,206.30, DAX +0.07% at 11,427.47, CAC-40 +0.04% at 5,309.37, IBEX-35 +0.16% at 9,197.67, FTSE MIB +0.43% at 21,229.50, SMI -0.12% at 21,229.50, S&P 500 Futures +0.20%

2. Oil prices mixed, demand concerns cloud outlook, gold steady

Oil prices are trading mixed this morning, with Brent extending yesterday’s rise, but gains are somewhat capped amid growing fears over the impact of a global economic slowdown on consumer demand.

Brent has added +16c, or +0.2%, to +$68.13 and is not far off its year-to-date high of +$68.69 reached last week. U.S crude futures are down -3c at +$59.91. The U.S benchmark rallied +1.9% Tuesday.

Oil rallied in yesterday’s session following a massive power blackout at Venezuela’s main oil export port of Jose on Monday – it was the second in a month.

Crude oil is on course for its best quarter in a decade, with the latest jump coming after Russian Energy Minister Novak indicated that his country will reach its pledged output cut of -228K bpd by the end of March.

Oil prices have been supported for much of this year by efforts of OPEC+, who have pledged to withhold around +1.2M bpd of supply this year to prop up markets.

Investors will take their cues from today’s weekly U.S inventory data later this morning (10:30 AM EDT).

Ahead of the U.S open, gold is trading steady, after declining the most in nearly two weeks Tuesday, as a stronger U.S dollar offset the ‘yellow metals’ gains stemming from fears of a possible recession in the U.S spot gold is flat at +$1,315.11 per ounce, while U.S. gold futures are down -0.1% at +$1,313.20 an ounce.

3. Central banks ‘dovish’ messages continue

Overnight, the Reserve Bank of New Zealand (RBNZ) left their official cash rate (OCR) unchanged as expected at +1.75%. The accompanying statement indicated that the next rate adjustment is “down” as opposed to the prior statement that the “next move in official cash rate could be up or down.” Following the statement, money markets are currently pricing in a rate cut for next November 2019 versus June 2020. New Zealand 2-year yield have declined over -10 bps.

Germany’s 10-year Bund yield has fallen again, as the drop below zero accelerates. German 10’s fell over -3 bps to -0.048% against a backdrop of worries about global growth from China to the U.S. Across the euro area, 10-year bond yields are down -2 to -3 bps. They have fallen since the ECB earlier this month pushed back its guidance for a rate increase and flagged a fresh round of cheap bank loans to help the economy.

Elsewhere, the yield on 10-year Treasuries has fallen -1 bps to +2.41%, while down-under, the Aussie 10-year yield has dipped about -5 bps to +1.77%.

4. Kiwi crushed, sterling little changed

Australasian currencies, especially the NZD came under immense market pressure overnight, sinking to a new two-month low (NZ$0.6797, down -1.3% outright) after the RBNZ joined other main central banks touting their global ‘dovish’ theme (see above) by indicating that its next interest rate move will be “down.” In sympathy the AUD has been dragged lower to just shy of A$0.7100.

Sterling (£1.3198) is trading flat and is expected to remain in tight range as the U.K parliament outlines their preferred options on the path of Brexit. From those outlined options the most popular will be picked for a run-off process which is to follow early next week (expected Monday April 1). Then the most popular options among those picked should be selected and provide guidance for the future Brexit path and negotiations with the EU. EUR/GBP is flat at €0.8539.

Currently trading at €1.1260, the EUR remains on the downside, while the yen is little changed at ¥110.58 after a -0.6% fall in yesterday’s session.

5. China’s industrial profits shrink most in 8-years as economy cools

Data overnight from China showed that industrial firms posted their worst slump in profits in eight-years for the first two-months of this year. Increasing strains on the world’s second largest economy, like slowing domestic and foreign demand took a toll on businesses.

According to the National Bureau of Statistics (NBS), profits for January-February slumped -14% y/y to ¥708.01B – the biggest contraction since October 2011.

Data like this would suggest that China could see further trouble. Already, the government has lowered the economic growth target for 2019 to +6.0-6.5%, from the actual rate of +6.6% of last year.

Digging deeper, analysts said the drag profits was mainly due to price contractions in key industrial sectors such as auto, oil processing, steel and chemical industries.

EUR/USD continues to drift this week. In Wednesday trade, the pair is trading at 1.1276, up 0.09% on the day. On the release front, there are no major eurozone or German numbers, but ECB Mario Draghi speaks at an ECB event in Frankfurt. The U.S. releases current account and trade balance. On Thursday, Germany releases CPI and the U.S. publishes GDP and unemployment claims.

German confidence indicators continue to raise concerns about the health of the economy. Consumer climate slipped in March to 10.4 points, after two successive readings of 10.8 points. With the eurozone mired in an economic slowdown and German numbers pointing to weaker growth, it’s not surprising that the German consumer has become less optimistic. On Tuesday, German business confidence improved slightly in March, with a reading of 99.6 points. The markets have been accustomed to releases above the 100-level, and the February reading of 98.5 was the weakest since November 2014. The survey noted that any improvement was confined to domestic sectors, such as construction and retail services.

The eurozone manufacturing sector remains weak, battered down by the ongoing global trade war. Germany, the locomotive of the eurozone, has also seen manufacturing numbers slip. There has been less demand for German exports, such as vehicles and auto parts.

RBNZ tone adds to Fed speculation

A quiet Asian session as equity markets staged a mild recovery ahead of Brexit uncertainty. The increased probability of a soft or no Brexit has encouraged investors. However, this one will clearly go down to the wire. The GBP trade still is asymmetrical with upside from an EU relationship likely resulting in strong GBP buying. Earlier, the Reserve Bank of New Zealand held the official cash rate at 1.75 as was widely anticipated. However, the meeting took a dovish turn as the committee stated that the "more likely direction" for rates would be lower. This shift in tone has increased the risk easing of monetary policy.

According to market IOS pricing a cut at the May meeting is unlikely (but not impossible) the August meeting is clearly in play. The NZD reacted sharply to the dovish twist falling over 1%. In general, the news that the RBNZ was contemplating benchmark rate cut would be isolated to Asian markets. However, as speculation that the Fed next move will be to cut rates, the widening circle of dovish central bank only solidifies the theory. US treasury yields fell marginally while the greenback gained against g10 currencies.

Brexit still in focus (again)

It is going to be long day for UK lawmakers, as the Commons will start voting on alternatives on Wednesday. This morning, each MP will have to choose which alternatives he/she wants to back. Afterwards, the alternative with the highest support will win. The range of conceivable options is quite broad - more than 15 alternatives – and encompass a custom unions, common market, no deal, revoking article 50 or even a second referendum. Keep in mind that the series of vote is indicative; therefore we doubt there will be a conclusion today. Investors will have to keep patience.

GBP/USD has been trading sideways around $1.32 since the beginning of the week amid persistent uncertainties stemming from the Brexit situation. We anticipate that the fact that MPs took over the control wouldn’t accelerate the process and therefore we would surprise to see the UK asking for another extension. As of today, the UK will have to come with a solution before April 12, or it will be a no deal Brexit. EUR/GBP has stabilised around 0.8445. We believe that even in the event of a no deal Brexit, the economic slowdown of the European Union would inevitably weighs on the single currency, at least in the long-term.

The single European currency tested a resistance cluster formed by the weekly and the monthly PPs at 124.95 during the previous trading session. After hitting the resistance cluster, the currency pair began to depreciate. At the end of yesterday's trading session, the exchange rate has lost about 0.58% of its value.

Everything being equal, it is likely that the currency exchange rate will edge lower within this session. The potential target for the pair will be at the lower boundary of a medium-term descending channel pattern at 123.68.

However, the pair could aim for a re-test of the resistance cluster as mentioned earlier.

As predicted, the New Zealand Dollar hit a resistance cluster formed by the weekly and the monthly pivot points at 0.7147 during yesterday's trading session. After the currency pair tested the resistance cluster, a pullback occurred as expected.

The exchange rate began today's trading session with a bearish momentum, and by the middle of the trading hours, the Kiwi has lost about 0.77% in value against the US Dollar.

As for the near future, it is likely that the currency exchange rate regains some of its lost position.

However, the 50-, 100– and 200-hour simple moving averages could hinder such movement today.

The US Dollar traded with low volatility against the Canadian Dollar on Tuesday. The currency pair moved just about 32 base points during yesterday's trading session.

As for the near future, it is likely that the currency exchange rate will decline towards a support cluster formed by the combination of the weekly and the monthly pivot points against 1.3310.

If the support cluster as mentioned above holds, a potential upside reversal could follow during the following trading session.

Meanwhile, technical indicators demonstrate that the USD/CAD currency pair might trade sideways within this session.

The New Zealand Dollar traded with low volatility against the US Dollar on Tuesday. However, the New Zealand macroeconomic data releases changed the overall position of the currency exchange rate during the Asian trading session on Wednesday.

The NZD/USD currency pair lost about 1.75% of its values during the first half of today's trading session.

Everything being equal, it is likely that bears could regain some of its lost positions within this session. The potential upside target will be near the 200-hour simple moving average at 0.6873.

The EUR/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.13158
Open: 1.12696
% chg. over the last day: -0.34
Day's range: 1.12469 – 1.12772
52 wk range: 1.1214 – 1.2557

EUR/USD started to descend again. During the last two days of trading, the quotes fell by 60 points and set the new minimums. This is mostly caused by technical factors and right now the quotes are consolidating around 1.12500-1.12800. You should open positions from these levels.

The Economic News Feed for 27.03.2019:

Trading Balance Report (US) – 14:30 (GMT+2:00);

The price fixed below 50 MA and 200 MA which points to the power of the sellers.

The MACD histogram is in the negative zone and above the signal line which gives a weak signal to sell EUR/USD.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which points to the bullish mood.

Trading recommendations

Support levels: 1.12500, 1.12000
Resistance levels: 1.12800, 1.13000, 1.13250

If the price fixes below 1.12500, expect the quotes to fall toward 1.12000.

Alternatively, the quotes can recover toward 1.13200-1.13400.

The GBP/USD currency pair

Technical indicators of the currency pair:

Prev Open: 1.31946
Open: 1.32053
% chg. over the last day: +0.05
Day's range: 1.31661 – 1.32150
52 wk range: 1.2438 – 1.4378

GBP/USD is in a long flat. The key support and resistance levels are 1.31600 and 1.32250. The Brexit remains in the spotlight. As a reminder, last week the British parliamentaries voted to handle the Brexit situation themselves, revoking Theresa May's rights. Today the parliamentaries will vote on different Brexit options. Keep tracking this situations and open positions from the key levels.

The Economic News Feed for 27.03.2019 is calm.

The indicators do not provide precise data, the price has crossed 50 MA and 200 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is above the %D line which points to the bullish mood.

Trading recommendations

Support levels: 1.31600, 1.31000, 1.30300
Resistance levels: 1.32250, 1.33000, 1.33600

If the price fixes above 1.32250, expect the quotes to grow toward 1.32750-1.33000.

Alternatively, the quotes can fall toward 1.31000.

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

The USD/CAD currency pair

Technical indicators of the currency pair:

Prev Open: 1.34064
Open: 1.33843
% chg. over the last day: -0.16
Day's range: 1.33783 – 1.34052
52 wk range: 1.2248 – 1.3664

USD/CAD shows a variety of trends. The trading instrument is consolidating. The financial market participants are waiting for additional drivers. CAD is testing the local support and resistance levels at 1.33750 and 1.34100. The USD/CAD quotes have a tendency to descend. Keep an eye on the oil quotes dynamics and open positions from the key levels.

The Economic News Feed for 27.03.2019 is calm.

The indicators do not provide precise signals, the price fixed between 50 MA and 200 MA.

The MACD is close to 0.

The Stochastic Oscillator is near the oversold zone, the %K line is below the %D line which points to the bearish mood.

Trading recommendations

Support levels: 1.33750, 1.33500, 1.33100
Resistance levels: 1.34100, 1.34400, 1.35000

If the price fixes below 1.33750, expect the quotes to fall toward 1.33500-1.33200.

Alternatively, the quotes can grow toward 1.34300-1.34600..

The USD/JPY currency pair

Technical indicators of the currency pair:

Prev Open: 109.977
Open: 110.591
% chg. over the last day: -0.55
Day's range: 110.407 – 110.711
52 wk range: 104.56 – 114.56

USD/JPY retreated from the monthly maximums. Yesterday the quotes grew by 60 points and are currently consolidating around 110.400-110.700. It's possible that the bearish mood will return soon due to weak economic releases from the US and a fall of the US Treasury bonds' yield. You should open positions from the key levels.

The Economic News Feed for 27.03.2019 is calm.

The indicators do not provide precise signals, the price fixed between 50 MA and 200 MA.

The MACD histogram is in the positive zone and below the signal line which gives a weak signal to buy USD/JPY.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line which points to the bullish mood.

Trading recommendations

Support levels: 110.400, 110.100, 109.800
Resistance levels: 110.700, 110.900, 111.150

If the price fixes below 110.400, expect the quotes to fall toward 110.000-109.800.

Alternatively, the quotes can recover toward 111.000-111.200.

Notes/Observations

• European confidence data mixed in session (Sweden beats, Italy Misses; France in-line)
• UK parliament to debate its preferred options on the path of Brexit; PM May still trying to arrange a 3rd meaningful vote
• Plethora of ECB speak only echoed views entrenched at its most recent policy meeting with concerns over the growth outlook
• RBNZ kept its policy steady but signaled its next rate move would be a cut
• US/China due to hold trade talks in China on March 28-29th (Thursday-Friday)

Asia:

• New Zealand Central Bank (RBNZ) left its Official Cash Rate (OCR) unchanged at 1.75% (as expected). Reiterated to keep cash rate expansionary for considerable period but revised its forward guidance to more likely that next rate adjustment is down (prior view was neutral with next move in OCR could be up or down); money markets now pricing in rate cut in Nov 2019 (vs June 2020 prior)
• China Feb YTD Industrial Profits YoY: -14.0% V -1.9% prior
• China Q1 Beige Book notes Q1 recovery is unmistakable, profits, investment and hiring improved

Europe:

• Pro-Brexit MPs write to PM May questioning her legal right to delay leaving the EU. To ask PM May to fully explain actions taken by government to delay Brexit
• The 1922 Chairman Brady said to have told the PM May in a 1 to 1 meeting on Tuesday (Mar 26th) that she should set a departure timetable to go before summer stage of Brexit
• PM May said to be preparing to bring Meaningful Vote 3 to the Commons by the end of the week as prominent Leavers say she is within sight of victory
• UK lawmaker proposed motion for EEA-EFTA Norway option to be voted on in parliament on Wednesday
• Boles Common Market 2.0 motion: UK would stay in Single Market and enter 'comprehensive customs arrangement' with common external tariff. The Northern Irish Backstop superceded. EU migrants must be 'genuinely seeking work' and have 'sufficient resources' so they are not a 'burden'
• MP Boris Johnson: if we vote down PM May's deal again there is an 'appreciable risk' that Brexit won't happen
• France govt might cut 2019 deficit outlook to 3.0% in next few days from 3.2%
• Italy's to revise 2019 GDP to 0.1%; its planned growth boosting package may lift 2019 GDP to 0.2% and trim budget deficit to 2.3% of GDP

Americas:

• Fed's Daly (dove, non-voter): Right now appropriate policy was being patient, wait to see if data would indicate whether up or down move is needed; wage growth coming up, had not stalled out
• President Trump's nominee for Fed Stephen Moore: Fed should immediately cut rates by 50bps

Energy:

• Weekly API Oil Inventories: Crude: +1.9M v -2.1M prior
• SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.11% at 377.62, FTSE +0.14% at 7,206.30, DAX +0.07% at 11,427.47, CAC-40 +0.04% at 5,309.37, IBEX-35 +0.16% at 9,197.67, FTSE MIB +0.43% at 21,229.50, SMI -0.12% at 21,229.50, S&P 500 Futures +0.20%]
• Market Focal Points/Key Themes: European Indices trade mixed in range bound trade as bond yields continue to go lower. US Index futures point to another higher open while Asian Indices traded mixed. On the corporate front shares of Debenhams rise sharply for a second straight day after Sports Direct confirmed a possible 5p/shr offer; RDI Reit rises following an approach from Cromwell Property Group. Renault, Fiat and PSA Group all rise following reports Renault planing to restart merger talks with Nissan within the next year, and plans to acquire another car manufacturer following the merger. On the earnings front Commerzbank trades over 3% higher after comments at its investor day, Elringklinger trades higher on earnings and affirmed guidance, with Hilton Food Group, SGL Carbon and HolidayCheck among other names rising on earnings. Meanwhile Accesso, Neopost and Epigenomcs among the names declining after earnings. Elsewhere shares of Swedbank fall on reports that the bank may have misled investigators on money laundering investigations. Looking ahead notable earners include Paychex, Lennar Corp, At Home Group and Titan Machinery among others.

Equities

• Consumer discretionary: HolidayCheck [HOC.DE] +8.5% (earnings)
• Consumer staples: Imperial Brands [IMB.UK] -1% (trading update)
• Financials: Commerzbank [CBK.DE] +3% (outlook in Annual Report), Swedbank {SWEDA.SE] -4% (Swedish TV update on investigation), Bellway [BWY.UK] +2% (earnings), RDI REIT [RDI.UK] +17% (confirms it was approached)
• Industrials: Renault [RNO.FR] +4%, Fiat Chrysler [FCA.IT] +4% (merger speculation), Diploma [DPLM.UK] -0.5% (trading update)
• Technology: Avast [AVST.UK] -6% (placing), accesso Technology Group [ACSO.UK] -15% (earnings; outllook)

Speakers

• ECB's Draghi: Euro Zone economy had remained relatively resilient but risks have risen in recent months. eiterates General Council view that risks to outlook still tilted to downside but had seen a more persistent deterioration in external demand. Reiterated that current soft patch did not necessary foreshadow a recession as latest surveys suggested some recovery in business sentiment. Remain confident of the sustained convergence of inflation and reiterated view that not short of instruments to deliver on mandate. TLTRO design to reflect evolving economic conditions
• ECB's Praet (Belgium, Chief Economist): TLTRO were flexible tools with parameters that can be re-calibrated; incentives to depend on bank lending outlook. Incentives to also look into cliff effects that were being created in the future. ECB was alert to downside risks but only so much that monetary policy could do
• ECB's Visco (Italy): Public finance outlook had worsened Italy's economic slowdown; urgent measures were needed to contrast the economic slowdown and rising poverty. Conditions of Italian public debt funding had worsened and reiterated that Italy needed credible medium-term strategy to reduce its debt
• UK Commons leader Leadsom reiterated govt stance that indicative votes gave cause for great concern; Govt should run the business for parliament. Govt looked very carefully at Parliament views. Issue of whether govt to instruct Tory members on how to vote on indicative votes was being considered. 3rd meaningful vote could return to parliament later this week (Thursday or Friday); still in discussions with Northern Irish DUP party
• UK Conservative MP Letwin: Parliament had been clear it does not want to leave EU without a deal. Unlikely that today's vote would reveal a majority for anything but perhaps would give light on what might emerge
• UK Labour official Gardner (opposition): Party would not revoke Article 50
• EU's Tusk reiterated that April 12th was the new Brexit cliff-edge date; EU Parliament should be open to a long Brexit extension
• Swiss KOF Institute Spring Economic Forecast cut its 2019 GDP growth from 1.6% to 1.0% while maintaining 2020 GDP growth at 2.1%. It noted that the economy had to contend with challenging conditions (cited Brexit uncertainty, economic slowdown in China, downturn in the euro area)
• Italy business lobby Confindustria said to raise its forecast for Italy 2019 budget deficit to GDP from 2.0% to 2.6%
• Japan Upper House formally passes record ¥101.5T budget for FY2019/20
• Japan Fin Min Aso: Fiscal year budget aimed at smoothing demand around the upcoming sales tax increase
• Fed's Kaplan (dove, non-voter): Too soon to consider lowering rates. Would need to see a larger, more pronounced yield curve inversion to consider a rate cut

Currencies/Fixed Income

• Overall FX price action was non-existent in the session.
• The GBP was little changed ahead of the UK parliament debate which would outline its preferred options on the path of Brexit. GBP/USD hovering around the 1.32 handle
• The mover in Asia was the NZD currency (Kiwi) which was markedly weaker after RBNZ kept its policy steady but signaled its next rate move would be a cut. NZD/USD lower by 1.3% to test 0.6810 just ahead of the US morning.

Economic Data

• (NO) Norway Jan AKU Unemployment Rate: 3.9% v 3.7%e
• (FI) Finland Mar Consumer Confidence Index: 16.1 v 15.5 prior; Business Confidence: +1 v -2 prior
• (FR) France Mar Consumer Confidence: 96 v 96e
• (FR) France Feb PPI M/M: 0.4% v 0.3% prior; Y/Y: 2.1% v 1.7% prior
• (ES) Spain Jan Total Mortgage Lending Y/Y: 16.2% v 23.1% prior; House Mortgage Approvals Y/Y: 22.5% v 0.9% prior
• (SE) Sweden Mar Consumer Confidence: 94.0 v 93.0e; Manufacturing Confidence: 107.5 v 112.1e; Economic Tendency Survey: 101.7 v 102.0e
• (SE) Sweden Feb Household Lending Y/Y: 5.3% v 5.4% prior
• (SE) Sweden Feb Trade Balance (SEK): 5.0B v 3.1B prior
• (IT) Italy Mar Consumer Confidence Index: 111.2 v 112.5e; Manufacturing Confidence: 100.8 v 101.4e prior; Economic Sentiment: 99.2 v 98.2 prior
• (CH) Swiss Mar Credit Suisse Expectations Survey: -26.9 v -16.6 prior
• (AT) Austria Mar Manufacturing PMI: 50.0 v 51.8 prior (38th month without a contraction)

Fixed Income Issuance

• (IN) India sold total INR100B vs. INR100B indicated in 3-month, 6-month and 12-month bills
• (RO) Romania opened its book to sell EUR-denominated 7-year, 15-year and 30-year bonds via syndicate

Looking Ahead

• (PT) Portugal Year-to-Date Budget Report
• (BR) Brazil Feb Total Federal Debt (BRL): No est v 3.808T prior
• (UK) Treasury report on co-op bank probe:
• 06:00 (IS) Iceland Mar CPI M/M: No est v 0.2% prior; Y/Y: No est v 3.0% prior
• 06:00 (DE) ECB's Lautenschlaeger (Germany) participates in Panel in Vienna
• 06:00 (EU) Daily Euribor Fixing
• 06:00 (ZA) South Africa announces details of next bond auction (held on Tuesdays)
• 06:00 (IT) Italy Debt Agency (Tesoro) to sell €6.0B in 6-month Bills
• 06:00 (SE) Sweden to sell combined SEK1.5B in 2029 and 2032 Bonds
• 06:00 (NO) Norway to sell NOK3.0B in 2.0% Apr 2028 bonds
• 06:30 (EU) ECB allotment in 3-month LTRO tender (prior €1.3B with 15 bids recd)
• 06:30 (DE) Germany to sell €3.0B in 0.25% Feb 2029 Bunds
• 06:45 (ES) ECB's de Guindos (Spain) speaks in Frankfurt
• 07:00 (US) MBA Mortgage Applications w/e Mar 22nd: No est v 1.6% prior
• 07:00 (UK) Mar CBI Retailing Reported Sales: 4e v 0 prior; Total Distribution: No est v 14 prior
• 07:00 (BR) Brazil Mar FGV Consumer Confidence: No est v 96.1 prior
• 07:00 (RU) Russia OFZ Bond auction results
• 07:45 (US) Daily Libor Fixing
• 08:00 (UK) Weekly PM May question time in House of Commons
• 08:30 (US) Jan Trade Balance: -$57.0Be v -$59.8B prior
• 08:30 (CA) Canada Jan Int'l Merchandise Trade (CAD): -3.6Be v -4.6B prior
• 09:00 (UK) Baltic Bulk Index
• 09:30 (BR) Brazil Feb Total Outstanding Loans (BRL): No est v 3.232T prior; M/M: No est v -0.9% prior; Personal Loan Default Rate: No est v 4.8% prior
• 09:30 (LX) ECB's Mersch (Luxembourg) speaks in Frankfurt
• 10:00 (US) Q4 Current Account Balance: -$130.0Be v -$124.8B prior
• 10:00 (MX) Mexico Feb Trade Balance: +$0.3Be v -$4.8B prior
• 10:00 (MX) Mexico Feb Unemployment Rate (Seasonally Adj): 3.6%e v 3.5% prior; Unemployment Rate (unadj): 3.5%e v 3.6% prior
• 10:30 (US) Weekly DOE Crude Oil Inventories
• 11:30 (US) Treasury to sell $18B in 2-Year Floating Rate Notes Reopening
• 13:00 (US) Treasury to sell $41B in 5-Year Notes
• 13:00 (SE) Sweden Central Bank (Riksbank) Gov Ingves
• 13:30 (FR) ECB's Villeroy (France) speaks in Geneva

Another day, another vote in Parliament

UK MPs will once again convene in Parliament on Wednesday for another series of Brexit votes, this time on a range of alternative options to that negotiated by Prime Minister Theresa May, who's deal has been rejected twice in the Commons. The aim of today's vote is to, almost two years to the day since article 50 was triggered, find out what exactly there is majority support for in Parliament, if anything.

While this is widely seen as being a humiliation for May, with Parliamentary process having been taken away from the government, it may work in her favour, with members of the ERG and other hard-line Brexiteers already indicating that they could support her in a third vote. Once again, sterling traders are unmoved though, potentially a sign that this is being viewed as a pointless exercise that won't yield a real change in the process and may instead just edge us ever closer to May's deal, albeit with further embarrassments along the way including a commitment to resign in order to get it over the line.

Gold rally held back by dollar and risk resistance

Gold is trading relatively flat early in the session on Wednesday, having pulled off its highs on Tuesday as risk appetite improved. There are a number of potential bullish factors in the pipeline for gold but there is proving to be fierce resistance in each of these cases.

With the dollar recovering from its lows and Friday's sell-off not gathering momentum early this week, gold has lost some of its appeal. It continues to find resistance around $1,320 as dollar and equity market bulls put up a strong fight. Whether this can be sustained is another thing, with investors increasingly fearing recession and central banks looking increasingly accommodative.

Oil rally short-lived on poor momentum

Oil prices were given another lift on Tuesday, buoyed by an improvement in overall market risk appetite, although a rise in inventories – as reported by API – did take some of the spark out of the rally. Once again, we're seeing the rally struggle to gather momentum as the very gradual rally runs into almost immediate resistance.

There is a serious lack of momentum in the oil rally which doesn't make me feel particularly bullish at these levels. It's understandable that traders are cautious right now, given the global economic outlook and record US output but prices are gradually rising which suggests there is a general feeling that output cuts will work and that the decline in US rigs since November will eventually take its toll.