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The British Pound bounced off from a support level formed by the monthly pivot point at 1.8432 on March 12 and had since gained about 1.43% in values against the Australian Dollar.

Taking into consideration the structure of the GBP/AUD currency pair, it is likely that the exchange rate will aim for a resistance cluster formed by the combination of the weekly and the monthly pivot points at 1.8995 during the following trading sessions.

Meanwhile, technical indicators flash buy signals on both the smaller and the larger time-frame charts.

The 100– hour simple moving average has been guiding the Pound Sterling higher against the Canadian Dollar since late February. The currency pair re-tested the 100-hour SMA during last week's trading sessions. Australian Dollar

Given that the GBP/CAD currency pair has breached a resistance cluster at 1.7692, bullish traders could push the price towards the upper boundary of a medium-term ascending channel pattern at 1.7800.

Moreover, technical indicators demonstrate that bulls could continue their dominance in the market during the following trading sessions.

Notes/Observations

• Question lingers on how long any Brexit delay would be
• Focus on Wed FOMC rate decision with expectations for an accommodative Fed given recent soft US data

Asia:

• RBA Mar Minutes reiterated stance that saw no strong case for any near-term adjustment in policy; Scenarios were more evenly balanced compared to last year (Neutral policy). Noted of 'considerable uncertainty' around consumption outlook
• Australia Q4 Housing Prices worse than expected and makes RBA easing bets grow; Aussy 3-year yield below RBA rate for 1st time since 2016

Europe:

• EU to formally agree on Brexit delay this week potentially until July 1st. The change in departure date to July 1st might convince the UK speaker that the deal had changed and could be enough for a 3rd meaningful vote to happen. EU officials believe that issuing a summit communique with legal force, known as council conclusions, containing a new date could be sufficient for another vote.EU leaders could suggest a 3-9 month extension if PM May deal passed parliament
• UK Junior Brexit Min Kwarteng stated that would look at requesting extension to Article 50 ahead of March European Council. Length of any extension would be agreed between the EU and the UK govt. Still saw a chance the Brexit deal would come back and go through Parliament; acknowledged there was a slim chance that a new 'meaningful vote' would pass. If the EU Council did not grant an extension, then the UK would leave on March 29th with no deal - PM May said to be drafting a letter to EU Council President Tusk to formally ask for a Brexit delay of between 9 and 12 months
• Parliament Speaker Bercow: PM May must change Brexit deal to hold third 'meaningful vote'; May could not put the same Brexit deal to a third vote
• UK Attorney General Cox noted that there were ways around Bercow's ruling; prorogation was option for Govt;
• German Chancellor Merkel: hoped that euro zone inflation would soon rise to target level so that the ECB could change its policy

Americas:

• Agricultural Sec Perdue: US/China trade talks remain very dynamic; China had made some very attractive offers for US agricultural products. China could triple its buying of US farm products

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Equities

• Indices [Stoxx600 +0.42% at 383.72, FTSE +0.34% at 7,324.25, DAX +0.52% at 11,717.91, CAC-40 +0.20% at 5,423.46, IBEX-35 +0.37% at 9,443.80, FTSE MIB +0.40% at 9,443.80, SMI +0.62% at 9,555.50, S&P 500 Futures +0.24%]
• Market Focal Points/Key Themes: European Indices trade slightly higher following a flat to lower session in Asia and slightly higher US futures, in a relatively quiet session so far. On the corporate front shares of UK online fashion retailer Asos declines after Q2 prelim Rev fell short of forecasts; Illiad falls after reporting slightly weaker Revenue and outlook; John Wood Group declines sharply on earnings and the stepping down of its Chairman, while Bonmarche, also declines after a weaker outlook. Softcat is a notable riser on upgraded guidance, Hochdorf, Ocado and Antofagasta also gain on earnings. In other news Norsk Hydro falls after it was subject to a cyber attack; Kier Group rises on the announcement of a new CEO while Rovi gains on positive study results. Looking ahead notable earners include HD Supply, DSW and Michaels.

Equities

• Consumer discretionary: Asos [ASC.UK] -3% (trading update), Swatch Group [UHR.CH] +2.5%, Richemont [CFR.CH] +2.5% (Swiss trade balance), Ocado [OCDO.UK] +3.5% (trading update), Antofagasta [ANTO.UK] +4% (earnings), Mears Group [MER.UK] -8% (earnings), Bonmarche [BON.UK] -16% (trading update),
• Energy: Norsk Hydro [NHY.NO] -2% (subject to cyber attack)
• Financials: Standard Life Aberdeen [SLA.UK] +2% (court outcome), Deutsche Bank [DBK.DE] -2%, Commerzbank [CBK.DE] -2% (DB said to work with Citigroup on Commerzbank merger)
• Healthcare:
• Industrials: Fraport [FRA.DE] -0.5% (earnings), John Wood Group [WG.UK] -4% (earnings; Chairman to step down), Kier Group [KIE.UK] +2% (CEO appointment)
• Telecom: Iliad [ILD.FR] -6% (earnings)

Speakers

• EU Commission's Dombrovskis reiterated that EU needed clarity from UK side on Brexit
• UK Brexit Sec Barclay: Parliamentary Speaker ruling mades it unlikely that a 3rd meaningful vote would occur this week; now in a situation where we would need an extension to Article 50. Talks with Northern Irish DUP party have been constructive; both sides want them to continue . Pro-Brexit MPs saw a growing risk of no Brexit. UK Govt would need to discuss a longer Brexit delay with EU
• German Bundesbank board member Wuermeling said to be concern about exposure of small businesses to Brexit and the slow pace of this 'repapering' process ahead of Brexit. Banks had been moving certain activities for their EU clients (including derivatives) from London to outside of the UK. But banks could only move clients business if they had been given permission to do so. On Banks he noted that mergers could not resolve challenges from negative interest rates; Bundesbank was neutral on mergers as it did not initiate them
• Norway Finance Ministry maintains 2019 Mainland GDP (non-oil) at 2.7% and set 2020 growth at 2.5%
• Norway Fin Min Jensen: Needed to avoid unnecessary pressure on rates and NOK currency (Krone); needed to continue with reforms and make tough choices
• Czech Central Bank Vice Gov Mora: Expected interests rates to be held steady at the March meeting as risks from overseas economies were clouding the domestic outlook
• OPEC Sec Gen Barkindo: Market is responding positively to OPEC+ meeting

Currencies/Fixed Income

• USD was on slightly soft footing ahead of Wed FOMC rate decision. The greenback was facing expectations for an accommodative Fed. Recent US data have conspired against the USD and underscoring the Fed's resolve to remain on hold for now. Overall for the YTD the greenback remained stronger against the bulk of the major pairs with most analysts believing dollar rally remained intact going forward.
• GBP/USD saw mixed economic data but higher wage data keeping a slight bid in the pair. The Wed release of UK inflation data was set to see CPI remain within the BOE target for the 2nd straight month. Focus remained on the BOE rate decision on Thursday but Brexit uncertainty will keep the central bank in a cautious mode.

Economic Data

• (CH) Swiss Feb Trade Balance (CHF): 3.1B v 3.0B prior; Real Exports M/M: 1.3% v 0.9% prior; Real Imports M/M: -3.0% v +5.4% prior; Watch Exports Y/Y: 3.4 v 0.6% prior
• (ES) Spain Q4 Labour Costs Y/Y: 0.9% v 1.9% prior
• (HK) Hong Kong Feb Unemployment Rate: 2.8% v 2.8%e (matched lowest level since Jan 1998)
• (PL) Poland Feb Employment M/M: 0.2% v 0.1%e; Y/Y: 2.9% v 2.9%e
• (PL) Poland Feb Average Gross Wages M/M: 0.4% v 0.2%e; Y/Y: 7.6% v 7.2%e
• (IT) Italy Jan Total Trade Balance: €0.3B v €2.8B prior; Trade Balance EU: +€0.9B v -€1.5B prior
• (UK) Feb Claimant Count Rate: 2.9% v 2.8% prior; Jobless Claims Change: +27.0K v +14.2K prior
• (UK) Jan Average Weekly Earnings 3M/Y: 3.4% v 3.2%e; Weekly Earnings (ex-Bonus) 3M/Y: 3.4% v 3.4%e
• (UK) Jan ILO Unemployment Rate: 3.9% v 4.0%e (lowest level since 1975); Employment Change 3M/3M: +222K v +120Ke

Fixed Income Issuance

• (ZA) South Africa sold total ZAR2.85 vs. ZAR2.85B indicated in 2023, 2032 and 2048 bonds

Looking Ahead

• (IL) Israel Mar 12-month CPI Forecast: No est v 1.2% prior
• (CO) Colombia Feb Consumer Confidence Index: -1.7e v -2.8 prior
• 06:00 (DE) Germany Mar ZEW Survey Current Situation: 13.0e v 15.0 prior; Expectations Survey: -11.5e v -13.4 prior
• 06:00 (EU) Euro Zone Mar ZEW Expectations Survey: No est v -16.6 prior
• 06:00 (EU) Euro Zone Jan Construction Output M/M: No est v -0.4% prior; Y/Y: No est v 0.7% prior
• 06:00 (EU) Euro Zone Q4 Labour Costs Y/Y: No est v 2.5% prior
• 06:00 (EU) Daily Euribor Fixing
• 06:15 (CH) Switzerland to sell 3-month Bills
• 06:30 (UK) Weekly John Lewis LFL Sales data
• 06:30 (EU) ECB allotment in 7-Day Main Refinancing Tender (MRO)
• 06:30 (HU) Hungary Debt Agency (AKK) to sell in 3-month Bills
• 06:30 (UK) BOE allotment in 6-month GBP-enhanced liquidity repo operation (ILTR)
• 07:00 (BR) Brazil Mar IGP-M Inflation (2nd Preview): 1.1%e v 0.6% prior
• 07:00 (PT) Portugal Feb PPI M/M: No est v -0.4% prior; Y/Y: No est v 1.2% prior
• 07:00 (TR) Turkey to sell Bonds
• 07:30 (EU) ESM to sell €2.5B in 6-month bills
• 07:45 (US) Daily Libor Fixing
• 07:45 (US) Weekly Chain Store Sales data
• 08:55 (US) Weekly Redbook Retail Sales data
• 09:00 (UK) Baltic Dry Bulk Index
• 09:00 (RU) Russia Feb PPI M/M: +0.5%e v -3.3% prior; Y/Y: 8.9%e v 9.5% prior
• 09:00 (SE) Sweden Central bank (Riksbank) Dep Gov Skingsley
• 09:00 (RU) Russia announces upcoming OFZ Bond issuance
• 10:00 (US) Jan Factory Orders: 0.3%e v 0.1% prior; Factory Orders (ex-transportation): No est v -0.6% prior
• 10:00 (US) Jan Final Durable Goods Orders: 0.4%e v 0.4% prelim; Durables (ex-transportation): No est v -0.1% prelim; Capital Goods Orders (Non-defense/ex-aircraft): No est v 0.8% prelim; Capital Goods Shipments (Non-defense/ex-aircraft): No est v 0.8% prelim
• 10:00 (EU) Weekly ECB Forex Reserves
• 10:30 (NZ) Fonterra Global Dairy Trade Auction:
• 11:00 (UK) BOE buys £1.15B in APF Gilt purchase operation
• 14:30 (UK) BOE Financial Policy Committee (FPC) member Sharp
• 16:30 (US) Weekly API Oil Inventory data

USDJPY is testing the upper side of a corrective channel so there is a chance for a red wave C) to be in progress to new low of the month. At the same time, this may put some downside pressure on JPY crosses as well, AUDJPY in particular where I anticipate wave E to complete a triangle. This AUDJPY can actually be a very nice long opportunity after a complete path, if at the same time, 10 year US yields will start turning higher.

USDJPY, 1h

AUDJPY, 4h

The single European currency depreciated about 51 base points against the Japanese Yen on Monday. The currency pair breached a support level formed by the 50-hour simple moving average at 126.35 during yesterday's trading session.

The exchange rate was stranded between SMAs during the first half of Tuesday's session. The 50-hour SMA was providing resistance for the pair, while the 100– hour SMA and the lower boundary of an ascending channel pattern was providing support at 126.22.

A breakout from the moving averages could be expected during the following trading session. Technical indicators suggest an upside breakout.

After hitting a resistance level formed by the weekly R1 at 0.7116, the Australian Dollar began to depreciate. The Aussie lost about 0.43% of its values against its US counterpart.

The exchange rate is currently testing a support line formed by the 50-hour simple moving average at 0.7096. If the support level holds, the currency exchange rate will continue its upside journey during the following trading session.

However, if the AUD/USD exchange rate passes the 50-hour SMA, bearish traders could push the pair towards the weekly PP at 0.7071.

The US Dollar appreciated about 63 base points against the Canadian Dollar on Monday. The currency pair breached the upper boundary of a medium-term descending channel pattern at 1.3340 during yesterday's trading session.

Given that a breakout had occurred, it is likely that the currency exchange rate will edge higher during the following trading session. The potential upside target will be near a resistance level formed by the 200-hour simple moving average at the 1.3373 region.

Although, technical indicators suggest that the USD/CAD pair could trade sideways movement within this session.

The New Zealand Dollar depreciated about 33 base points against the US Dollar on Monday. The currency pair tested the lower boundary of an ascending channel pattern at 0.6846 during the previous trading session.

As for the near future, it is likely the NZD/USD exchange rate will continue its movement in the medium-term ascending channel pattern. The rate could aim for the weekly R1 at 0.6885.

Meanwhile, technical indicators flash buy signals on both the smaller and the larger time frames chart.

The euro is probing towards key intraday resistance against the US dollar as the greenback comes under increasing pressure ahead of Wednesday’s FOMC policy decision. The EURUSD pair could easily advance towards the 1.1410 level if bulls can break trendline resistance. The MACD indicator on the four-hour time continues to indicate that bullish short-term pressures are growing.

The EURUSD pair is strongly bullish while trading above the 1.1360 level, key technical resistance is found at the 1.1410 and 1.1450 levels.

If the EURUSD pair fails around current level, sellers could test towards the 1.1325 and 1.1290 levels.

The British pound continues to recover towards the best levels of the trading week against the US dollar as dip-buying interest increases. If buyers can hold price above the 1.3300 level the GBPUSD pair could start to test toward the current 2019 trading high, at 1.3388. Traders should expect the overall bullish sentiment toward the GBPUSD pair to grow while the 1.3240 support level holds firm.

The GBPUSD pair is strongly bullish while trading above the 1.3300 level, key technical resistance is found at the 1.3349 and 1.3388 levels

If the GBPUSD pair trades below the 1.3240 level, sellers may test towards the 1.3200 and 1.3155 support levels.