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The UK pound rose sharply in overnight trading after Theresa May secured concessions from the European Union on her Brexit deal. The concessions aimed at reassuring British lawmakers that the country would have the power to break away from the EU economic orbit if a trade deal is not reached after Brexit. Even with this reassurance, Theresa May faces an uphill task to convince parliamentarians to vote on her deal. These talks are aimed to iron out a major issue on how to deal with Ireland, which will remain being part of the European Union, and North Ireland which is a part of the UK. Eurosceptics worry that Theresa May's deal will trap the UK into the EU's customs union if the two can't accept a deal. On economic data, traders will focus on the manufacturing, industrial production and trade data expected later today.

The price of crude oil continued to rally as traders continued to cheer the supply cuts from OPEC. In December, OPEC members and Russia agreed to cut supplies with the goal of hiking prices. This led to a sharp rise in prices. At the same time, pressure from Donald Trump to keep prices down does not seem to be having any effect. Over the weekend, an OPEC official told WSJ that the OPEC deal will likely remain until officials meet in June. In a statement, Bank of America Merrill Lynch said that it expects Brent to rise to $70 and WTI to reach $60 a barrel. This gain will be fueled by the increasing demand, especially from the marine sector as the new fuel rules by the International Maritime Organization kick in.

It will be an important day for the USD as the US is expected to release the CPI numbers. The headline CPI is expected to have risen by 1.6% in February while the core CPI is expected to have risen by 2.2%. On a MoM basis, the headline CPI is expected to have risen by 0.2% while the core CPI is expected to have remained unchanged at 0.2%. The US, like other developed countries, is experiencing a period of low inflation rate. In part, this has contributed to the relatively dovish statements coming from the Federal Reserve.

EUR/USD

The EUR/USD pair rose in overnight trading after Theresa May's deal with the EU. The pair reached a high of 1.1270. This level is above the 21-day and 42-day exponential moving average while the RSI has moved up to almost the overbought level of 70. The momentum indicator has remained above 100 and the current level is along the 38.2% Fibonacci Retracement level. The next levels to watch will be the 50% and 23.6% Fibonacci levels of 1.1300 and 1.1230.

GBP/USD

The GBP/USD pair rose sharply to a high of 1.3263, which was the highest level since March 4. This price is much higher than the 21-day and 42-day moving averages. The RSI has moved above 70 while the signal line of the MACD has risen to the highest level since February. The current price of 1.3210 is along the 61.8% Fibonacci Retracement level. The pair will likely fall to the 50% Fibonacci level of 1.3150 and then resume the upward trend.

AUD/USD

The AUD/USD pair was relatively unchanged after a report showed that home loans had declined sharply. The pair is currently trading at 0.7070, which appears to be a strong resistance level. This level is close to the 38.2% Fibonacci Retracement level. The price is above the 21-day and 42-day moving averages while the RSI has moved to almost 70. The price could break the resistance and move up, but this will depend on the US inflation data.

The euro currency is still attempting to correct higher against the US dollar, following weaker than expected US Retail Sales numbers. The EURUSD pair could correct towards the 1.1290 resistance level if buyers can sustain price above the pivotal 1.1230 level. The MACD indicator on the four-hour time frame continues to signal that the EURUSD pair could still correct much higher.

The EURUSD pair is intraday bullish while trading above the 1.1230 level, key technical resistance is found at the 1.1260 and 1.1290 levels.

If the EURUSD pair moves below the 1.1230 level, sellers may test towards the 1.1200 and 1.1175 levels.

The British pound has surged back towards the 1.3300 level against the US dollar after British PM Theresa May confirmed she will be holding a Brexit vote in UK Parliament later today. The GBPUSD pair has a bullish bias while trading above the 1.3100 level, with the 1.3350 level offering the strongest form of resistance above 1.3300. Sellers will need to move price back under the 1.3100 level, in order to negate intraday bullish trading momentum.

The GBPUSD pair is only bearish while trading below the 1.3100 level, key technical support is found at the 1.3000 and 1.2970 levels

If the GBPUSD pair trades above the 1.3260 level, buyers may test towards the 1.3300 and 1.3350 resistance levels.

Litecoin is attempting to recover bullish momentum, after coming under slight downside pressure in early week trading. The fourth-largest cryptocurrency by market capitalization needs to break above the $54.00 level in order to encourage further technical buying. If the LTCUSD pair trades under the $50.00, sellers will likely test towards the cryptocurrencies former weekly trading low.

The LTCUSD pair is bullish while trading above the $50.00 level, key technical resistance is found at the $54.00 and $65.00 levels.

If the LTCUSD pair trades below the $50.00 level, key support is found at the $45.00 and $41.50 levels.

General Trend:

• IT shares outperform in Shanghai
• Meituan Dianping declines over 10% in Hong Kong after Q4 earnings
• Japanese equity markets see broad rally, Out performers include Real Estate, Marine/Transportation and Electric Appliance companies
• Nissan gains ahead of later today board meeting
• Energy and Resources companies rise in Australia; Financials decline
• China Stats Bureau Chief: Jan-Feb economic operation was generally good (comments ahead of Thursday’s Feb data releases, including industrial production)
• Australia NAB business confidence declines to lowest since 2016
• Japan Q1 BSI Large Manufacturing index hits lowest since 2016, Tankan survey seen on April 1st
• US retail sales rebounded in Jan
• Asian currencies generally track gains in the Yuan (CNY): High-level US/China trade officials had phone conversation on Tuesday
• Philippines Peso (PHP) weakens amid central bank comments

Headlines/Economic Data

Australia/New Zealand

• ASX 200 opened +0.2%
• (AU) AUSTRALIA FEB NAB CONFIDENCE: 2 V 4 PRIOR; BUSINESS CONDITIONS: 4 V 7 PRIOR
• (AU) AUSTRALIA JAN HOME LOANS M/M: -1.2% V -2.0%E; Owner Occupier Loan Value m/m: -1.3% v 0.0%e; Investment Lending m/m: -4.1% v -1.5%e
• NEM Barrick and Newmont Forge Nevada JV agreement; Withdraws offer for Newmont following agreement
• (AU) Australia ANZ Roy Morgan Weekly Consumer Confidence: 109.5 v 114.8 prior
• XIP.AU To be acquired by IPH for A$1.97/share in cash and shares ( $1.28 cash and 0.1056 IPH shares)
• (AU) Australia Labor financial services spokeswoman O'Neil: Will fully implement 75 of 76 of Hayne's royal commission recommendations - AFR

Japan

• Nikkei 225 opened +1.1%
• (JP) JAPAN Q1 BUSINESS SURVEY INDEX (BSI) LARGE ALL INDUSTRY Q/Q: -1.7 V 4.3 PRIOR; BSI LARGE MANUFACTURING Q/Q: -7.3 V 5.5 PRIOR (weakest since 2016)
• (JP) Bank of Japan (BOJ) Deputy Gov Amamiya: BOJ has several options available, will consider benefits and side effects of policy - Q&A in parliament
• (JP) Japan Fin Min Aso: Do not expect domestic economy to worsen rapidly; reiterates to raise sales tax as planned - Q&A in parliament
• (JP) Japan may cancel plan to invite China President Xi Jinping to Japan in June, move could be out of consideration for US President Trump - Japanese Press
• RNO.FR Confirms talks on new alliance with Nissan and Mitsubishi; have not led to a definitive pact
• 7201.JP Tokyo court denies Ghosn request to attend Nissan's board meeting on Tuesday, 12th March
• (JP) Bank of Japan (BOJ) said to consider more cautious view of exports and output, seen as poised to cut assessments of exports and industrial production during this week's policy meeting - Japanese Press
• 6645.JP To be added to the Nikkei 225 index, replacing Pioneer; effective March 18th (+4.6%)
• (JP) Japan LDP Secretary General Nikai: 4th term for PM Abe is possible (in line with prior comments)
• (JP) Japan MoF sells ¥2.0T v ¥2.0T prior in 0.10% (prior 0.10%) 5-yr JGB: avg yield: -0.157% v -0.151% prior, bid to cover: 4.71x v 4.84x prior

Korea

• Kospi opens +0.8%
• (KR) South Korea Finance Ministry: IMF calls for active fiscal and monetary polices (overnight)
• (KR) North Korea to limit the number of foreign visitors to limit to 1.0K/day v 1.8K avg , effective next week; struggling to cope with a surge in the number of tourists following the first summit with the US - Yonhap
• (KR) South Korea Land Ministry: 2018 construction permits -6.2% y/y
• (KR) In Feb foreign investors remained net sellers in the South Korean bond market for second consecutive month; selling $190M v $3.2B sold in Jan - Yonhap

China/Hong Kong

• Hang Seng opens +0.9%; Shanghai Composite opens +0.7%
• (CN) China PBoC Open Market Operation (OMO): Skips OMO (9th consecutive skip); Net: nil v nil prior
• (CN) China PBoC Sets Yuan Reference Rate: 6.7128 v 6.7202 prior
• (CN) China Housing Min: Expectations for the property market has been rationalized; will increase stability of market and avoid big fluctuations
• (CN) China Liu he spoke with USTR Lighthizer and US Treasury Sec Mnuchin on the phone to make arrangements for next step in trade talks - Xinhua
• (CN) China National Petroleum Corp (CNPC) exec: holding talks with US LNG companies (doesn't identify any particular names)
• 486.HK Names Bernard Zonneveld new chairman, effective March 6th
• (CN) China Economic Information Daily: Domestic steel and iron industry to embrace 'bullish' outlook, notes the government's tax cuts and downstream demand
• (CN) China Stats Bureau Chief: Jan-Feb economic operation was generally good; China GDP data is reliable
• (CN) China Academy of Information and Communications Technology (CAICT): China Feb Mobile Phone shipments -19.9% y/y

Other Asia

• 2354.TW Microsoft files lawsuit against unit over unpaid royalties and not providing documentation to auditors – press
• (PH) Philippines Central Bank Gov Diokno: Reiterates room for easing, to consider CPI in timing of reserve ratio cut (room for 100bps cut to RRR every quarter); Peso's movement after his appointment within band
• (SG) Singapore Jan Retail Sales M/M: +0.2% v -3.4% prior; Y/Y 7.6% v 2.6%e; Retail Sales ex-auto Y/Y: +5.3% v -3.0% prior

North America

• BA CEO letter to employees: remains confident in safety of 737 MAX; have delivered more than 370 737 Max planes to 47 customers – press
• BA Makes Statement on 737 MAX Software Enhancement: has been working closely with the Federal Aviation Administration (FAA) on development, planning and certification of the software enhancement, and it will be deployed across the 737 MAX fleet in the coming weeks
• BA FAA looking to mandate design changes to 737 Max by April - US Press
• OPEC Sec Gen Barkindo: Dialogue with shale drillers is essential; Rebalancing the oil market continues to be work in progress, supply adjustments will continue in 2019

Europe

• (EU) EU Juncker: EU goal is an orderly Brexit, reiterates Brexit decision must be respected; Have a deal on the table which protects citizens and peace in Ireland
• (UK) PM May: Negotiations were hard fought, stand by what Brexit deal achieves; we have secured what Parliament asked for on backstop
• (UK) Labour Leader Corbyn: PM May negotiations have failed, agreement with EU does not contain changes May promised to Parliament
• (UK) Details emerge on UK PM May and Juncker talks, including 3 main parts (joint interpretative instrument ; unilateral statement from the UK; Additional language in the political declaration to emphasize the urgency on both sides) – Guardian
• (UK) UK Cabinet Office Minister Lidington: Negotiations are still taking place in Strasbourg, PM May has secured legally binding changes that strengthen and improve withdrawal agreement

Levels as of 1:25 ET

• Nikkei 225, +1.9%, ASX 200 -0.1%, Hang Seng +1.4%; Shanghai Composite +2%; Kospi +0.8%
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.3%, Dax +0.1%; FTSE100 flat
• EUR 1.1274-1.1244 ; JPY 111.34-111.17 ; AUD 0.7081-0.7066 ;NZD 0.6841-0.6829
• Gold +0.4% at $1,296/oz; Crude Oil +0.6% at $57.05/brl; Copper +0.8% at $2.930/lb

Market movers today

Today's key event will be the vote in the House of Commons on Theresa May's Brexit deal at 20:00 CET. As of now, we still expect May to suffer another defeat despite the new Brexit deal but it depends on how well it is received, especially by the supporting DUP party (see more under selected market news). We still assign a 15% probability of the deal passing today. If it is voted down, the next step will be for the UK parliament to vote on whether it can support a no deal Brexit tomorrow

In the UK , we also get monthly GDP for January today. PMIs indicate growth remains subdued around 0.0-0.1% q/q in Q1.

On the other side of the Atlantic, the day brings February US CPI core numbers, which we expect rose 0.2% m/m, implying a core inflation rate unchanged at 2.2% y/y. Moreover, we will also keep an eye on the NFIB Small Business Optimism Index given the recession fears in financial markets.

In the Scandi countries, Swedish inflation numbers for February will be in focus. The Norwegian regional network survey is also due out this morning (see next page).

Selected market news

Late last night, UK PM Theresa May reached an agreement with the EU27 on a new Brexit deal. EUR/GBP fell after the announcement and is currently trading at 0.852, the lowest level since spring 2017. The new Brexit deal gives the UK further assurances that the EU27 cannot keep the UK in the backstop forever by e.g. not engaging in negotiations on the future relationship. Also, the EU27 and UK agreed to speed up the negotiations on the future relationship, which, hopefully, should make the backstop redundant. Juncker said the EU will not negotiate any more.

The big question is whether the new concessions are enough for the hard Brexiteers and the DUP to support her in today's vote. As we have said several times, especially if the DUP backs the deal, it is a potential game changer, as many Brexiteers will likely follow suit. As of now, we have not changed our call that the probability of the deal passing today is just 15%. The problem for Theresa May is her very slim majority. Even if the DUP jumps on board and some hard Brexiteers follow suit, it may not be enough, as some die hard Conservative Brexiteers and Remainers probably will vote against the deal anyway and it is questionable whether she can get sufficient backing from Labour Brexiteers. If the deal is well received, we may change our minds during the day . Our base case remains that May's deal will pass eventually, but given most expect a delay of Brexit, the pressure is still not significant enough.

Otherwise, it is risk-on this morning. Asian stocks are up, as are US equity-index futures. Oil and metal prices are also higher. US 10yr Treasury yields are 1.6bp higher.

For the 24 hours to 23:00 GMT, the EUR rose 0.29% against the USD and closed at 1.1265.

In economic news, Germany's seasonally adjusted industrial production unexpectedly fell 0.8% on a monthly in January, amid decline in automobile output and defying market expectations for a gain of 0.5%. In preceding month, industrial production had recorded a revised rise of 0.8%. Moreover, the nation's seasonally adjusted trade surplus unexpectedly narrowed to €18.5 billion in January, compared to a revised surplus of €19.9 billion in the prior month. Market participants had expected the trade surplus to widen to €121.0 billion.

In the US, data showed that the US advance retail sales unexpectedly climbed 0.2% on a monthly basis in January, defying market consensus for a steady reading. In the previous month, advance retail sales had registered a revised fall of 1.6%. Furthermore, the nation's business inventories advanced 0.6% on a monthly basis in December, in line with market expectations. In the preceding month, business inventories had recorded a revised flat reading.

In the Asian session, at GMT0400, the pair is trading at 1.1261, with the EUR trading a tad lower against the USD from yesterday's close.

The pair is expected to find support at 1.1231, and a fall through could take it to the next support level of 1.1200. The pair is expected to find its first resistance at 1.1283, and a rise through could take it to the next resistance level of 1.1304.

Amid lack of macroeconomic releases in the Euro-zone today, traders would keep a close watch on the US NFIB small business optimism index and the consumer price index, both for February, set to release later in the day.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the GBP rose 2.09% against the USD and closed at 1.3244, ahead of a key Brexit vote in the British Parliament.

In the Asian session, at GMT0400, the pair is trading at 1.3216, with the GBP trading 0.21% lower against the USD from yesterday’s close.

The pair is expected to find support at 1.3022, and a fall through could take it to the next support level of 1.2829. The pair is expected to find its first resistance at 1.3349, and a rise through could take it to the next resistance level of 1.3483.

Trading trend in the Sterling today, is expected to be determined by UK’s trade balance data, industrial production, manufacturing production and gross domestic product, all for January, set to release in a few hours.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.16% against the JPY and closed at 111.29.

On the macro front, Japan's flash machine tool orders plunged 29.3% on an annual basis in February, recording its largest fall since 2009 and following a decline of 18.8% in the previous month.

In the Asian session, at GMT0400, the pair is trading at 111.41, with the USD trading 0.11% higher against the JPY from yesterday's close.

The pair is expected to find support at 111.14, and a fall through could take it to the next support level of 110.88. The pair is expected to find its first resistance at 111.56, and a rise through could take it to the next resistance level of 111.72.

Looking forward, investors would closely monitor Japan's machine orders for January, scheduled to release overnight.

The currency pair is trading above its 20 Hr and 50 Hr moving averages.

For the 24 hours to 23:00 GMT, the USD rose 0.14% against the CHF and closed at 1.0098.

Macroeconomic data revealed that, Switzerland’s total sight deposits eased to a level of CHF576.1 billion in the week ended 08 March 2019, from CHF576.4 billion in the previous week.

In the Asian session, at GMT0400, the pair is trading at 1.0104, with the USD trading 0.06% higher against the CHF from yesterday’s close.

The pair is expected to find support at 1.0076, and a fall through could take it to the next support level of 1.0048. The pair is expected to find its first resistance at 1.0126, and a rise through could take it to the next resistance level of 1.0148.

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