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Daily Pivots: (S1) 1.1331; (P) 1.1346; (R1) 1.1372; More...

No change in EUR/CHF's outlook as it's staying in range of 1.1310/1444. Intraday bias remains neutral for the moment. Further rise is in favor as long as 1.1310 support holds. On the upside, break of 1.1444 will resume the rebound from 1.1181 and target 1.1501 key resistance next. On the downside, firm break of 1.1310 will indicate completion of the rebound. In that case, intraday bias will be turned back to the downside for 1.1181 low again.

In the bigger picture, price actions from 1.2004 medium term top is seen as a correction only. Downside should be contained by 1.1154/98 support zone to complete it and bring rebound. Decisive break of 1.1501 (38.2% retracement of 1.2004 to 1.1173 at 1.1490) will confirm completion of the correction. Further rise should be seen to 61.8% retracement at 1.1687 and above next.

General Trend:

• Telecom service, IT and Materials firms outperform in early trading in China; property and financial shares lag
• Financial and Machinery companies trade lower in Japan, Fast Retailing drops over 2%
• Japan consumer name Sanrio rises over 11% amid speculation related to ‘Hello Kitty’ film
• Taiwanese DRAM maker Nanya speculated to cut Q1 shipments target (local press)
• Resources and Energy shares rise in Australia
• Bubs Australia (infant milk formula company) rises over 20% on jv in China
• Aussie dept. store Myer rises over 9%, swung to H1 profit
• Australian dollar (AUD) and bond yields decline on weaker GDP data
• BoJ raised daily purchase amounts for 5-10 yr JGB operation (as signaled)
• BoJ dissenter Harada said sales tax hike may cause recession, weaken CPI
• Philippine Peso (PHP) extends decline after recent CPI data, RRR cut speculation
• Australia Jan retail sales and trade data due on Thursday

Headlines/Economic Data

Japan

• Nikkei 225 opened -0.3%
• (JP) Bank of Japan (BOJ) Board Member Harada (dissenter): Underlying weakness in flation could weigh on inflation expectations, delay acceleration of inflation; BOJ must strengthen easing without hesitation if economy worsens, makes it hard to hit price goal
• 7013.JP Reportedly IHI has halted engine maintenance inspections at Toyko plant after allegations that it assigned unqualified workers to check aircraft engines – press
• (JP) Japan Finance Ministry (MOF) Currency Head Asakawa: The link between the yen and Japan's exports has been "severed" – press
• (JP) Bank of Japan (BOJ) announcement related to daily bond buying operation: raises 5-10-yr bond buying amount
• (JP) Japan PM Abe: Reiterates stance want to raise sales tax unless there is another Lehman size event

Korea

• Kospi opens -0.1%
• (KR) South Korea Feb Foreign Reserves: $404.7B v $405.5B prior (1st decline in 4-months)
• (KR) According to South Korea National Intelligence Service North Korea was taken aback by the sudden end to summit with Trump, it will take quite a while for them to review what happened to the summit - Korean press citing briefing to SK Govt
• (KR) US declines to comment if its been in contract with North Korea since the summit ended – Yonhap
• (KR) US National Sec Adviser Bolton: Will consider increasing sanctions on North Korea if no progress is made, North Korea has to reassess its strategy
• (KR) South Korea and the US said to be in talks regarding extension to oil waiver related to Iran - Local press

China/Hong Kong

• Hang Seng opens +0.1%; Shanghai Composite opens +0.2%
• Han’s Laser [002008.CN]: Hong Kong Exchange halted buy orders related to the company from foreign investors under the Shenzhen-Hong Kong Stock Connect program, offshore ownership of the company has approached the 30% cap
• (CN) China PBoC sets Yuan Reference Rate: 6. 7053 v 6.6998 prior
• (CN) China PBOC Open Market Operation (OMO): Skips OMO v skipped prior (5th consecutive skip); Net: CNY60B drain v CNY120B prior
• (CN) China President Xi may visit North Korea this month - Korean press
• (CN) China NDRC Chairman He Lifeng: China still has stable and improving outlook in 2019; to further reduce negative list for foreign investors this year, including agriculture, mining and service
• (CN) China Tangshan (top steel making city) extends curbs related to steel sintering until further notice , cites air pollution

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU) AUSTRALIA Q4 GDP Q/Q: 0.2% V 0.3%E (weakest reading since 2016); Y/Y: 2.3% V 2.6%E
• (AU) 'Australian economy in a recession of sorts', notes per-capital GDP declined in both Q3 and Q4 - US financial press article
• (AU) Australia Treasurer Frydenberg: Economy is fundamentally in good shape; to deliver budget surplus in April
• (AU) Reserve Bank of Australia (RBA) Gov Lowe: Current adjustment in housing markets is unusual, was not preceded by mortgage rates rising; Wealth effects influencing consumption but mainly through expectations - speaking at Australian Financial Review's 2019 Business Summit
• (AU) RBA Gov Lowe: Hard to think of a scenario where rates would rise this year; unlikely inflation going to be problem any time soon, no case to adjust inflation target; Q4 and Q3 GDP likely to show growth significantly below trend - Q&A
• MYR.AU Reports H1 (A$) Net +38.4M v -476M y/y, EBITDA 113.6M v 108.3M y/y; Rev 1.67B v 1.72B y/y
• BUB.AU Enters into MOU with Beingmate China to form JV
• (AU) JPMorgan now expects the RBA to cut rates in July and Aug 2019, notes growth unlikely to be enough to lower jobless rate - US financial press

Other Asia

• (PH) Philippine newly named Central Bank Gov Diokno: have to be more circumspect when it comes to the Peso; does not look at daily FX moves, looks at 'other factors'; premature to cut rates must be evidence based
• (PH) Philippines Finance Min Dominguez: Keeping 7-8% GDP target

North America

• (US) Weekly API Oil Inventories: Crude: +7.3M v -4.2M; Distillate: -3.1M v +0.4M prior
• JNJ FDA approves Spravato (esketamine) nasal spray, in conjunction with an oral antidepressant, for the treatment of depression in adults who have tried other antidepressant medicines but have not benefited from them (treatment-resistant depression)

Europe

• (UK) Cabinet reportedly told by Chief Whip that Brexit vote will be tight – press
• (UK) EU and UK Brexit negotiators end talks in Brussels with no agreement (as expected); talks to continue tomorrow – press
• (UK) Chief Whip: A soft Brexit could happen if PM May's deal is rejected again - press
• (US) US Fed said to consider more strict rules related to foreign bank branches - financial press
• LOGN.CH Affirms FY19 Op profit $340-345M; Rev +9-11% y/y at cc; Guides initial FY20 Op +10-12% from mid point of FY19; Rev mid high single digit increase at cc

Levels as of 12:50ET

• Hang Seng +0.3%; Shanghai Composite +0.9%; Kospi -0.2%; Nikkei225 -0.6%; ASX 200 +0.8%
• Equity Futures: S&P500 -0.2%; Nasdaq100 -0.2%, Dax -0.2%; FTSE100 +0.1%
• EUR 1.1290-1.1319; JPY 111.73-111.92; AUD 0.7029-0.7093; NZD 0.6754-0.6802
• Commodity Futures: Gold +0.3% at $1,287/oz; Crude Oil -0.9% at $56.05/brl; Copper -0.3% at $2.93/lb

Market movers today

Markets are still awaiting the two key events this week: the ECB meeting tomorrow and the US employment report on Friday.

Today, we get the US ADP employment report, which offers some input on the job situation in the US. However, note that the correlation with non-farm payrolls on a month-to-month basis is not very high.

Further, US trade data is due; while normally it does not receive a lot of market attention, the chance that it might show that the US trade deficit has grown by more than USD100bn due Trump's presidency could mean it gets some focus amid the final rounds of trade negotiations between the US and China.

The Bank of Canada is widely expected to leave policy rates unchanged at today's interim policy meeting. At the last meeting (9 January), Poloz and co signalled that the next policy move is still expected to be a hike. Meanwhile, as in the US, markets have fully priced out any hike probability over the next 12M. Given our constructive view on the global economy and our call on Fed and oil, we think this is too dovish. However, we doubt we will see any significant re-pricing post today's announcement.

Tonight, the Fed's Beige Book is released and we will have speeches by the two Fed members Williams (voter, neutral) and Mester (voter, hawk).

Selected market news

Mixed sentiment overnight with Asian equities struggling after small losses in the US session. Notably, weaker-than-expected Australian GDP data showing growth decelerated to 2.3% (previous 2.8%, consensus 2.6%) helped dent risk appetite in Asia. This came after a relatively strong US non-manufacturing ISM report on Tuesday afternoon, which saw the overall index rebound to 59.7 in February (previous 56.7), driven by a decent increase in both business activity and new orders, albeit the employment component actually fell somewhat. At least this underlines that a US recession is not imminent and we should be on track for a healthy level of Q1 growth with 3% q/q (ar) in sight. However, the Fed's Rosengren helped dampen any attempts to reprice the Fed on this, as he was out stating it may take 'several meetings' before the Fed is ready to move on rates again. US Treasuries ended the day mixed but the 10Y yield declined a tad to 2.72%. USD crosses continued to edge higher as the ISM report helped add to the sense of a possible bottom in the US cycle.

Separately, the GBP was supported yesterday by noteworthy comments from Bank of England (BoE) governor Carney that the current market path for the Bank rate 'may not be high enough'. Meanwhile, May's talks with the EU were reportedly unsuccessful yesterday (but are set to continue today) and preparations for a no-deal outcome continue. The BoE announced that it has set up a EUR swap line with the ECB to ensure UK banks can have access to euro funding. And according to Sky News , the UK may cut tariffs down to zero for 80-90% of all goods (excluding cars and some food products) in case of a no deal Brexit.

For the 24 hours to 23:00 GMT, the EUR declined 0.31% against the USD and closed at 1.1302.

On the macro front, Euro-zone's seasonally adjusted retail sales advanced at its fastest pace in three months by 2.2% on an annual basis in January, driven by robust internet sales and beating market expectations for a rise of 2.1%. In the prior month, retail sales recorded a revised gain of 0.3% in the previous month. Additionally, the final services PMI climbed to a level of 52.8 in February, notching its highest level in three months and surpassing market expectations for a rise to a level of 52.3. In the previous month, the services PMI had recorded a level of 51.2. The preliminary figures had indicated an advance to 52.3.

Separately, in Germany, the final services PMI advanced to a 5-month high level of 55.3 in February, overshooting market forecast for a rise to 55.1 and compared to a level of 53.0 in the previous month. The preliminary figures had indicated a rise to 55.1.

The US Dollar rose against its major peers yesterday, on the back of upbeat US economic data.

Data showed that the US ISM non-manufacturing index climbed to 59.7 in February, more than market forecast for an increase to 57.3. The index had registered a reading of 56.7 in the previous month. Moreover, new home sales unexpectedly rose 3.7% to a level of 621.0K on a monthly basis in December, compared to a revised reading of 599.0K in the previous month. Meanwhile, the final Markit services PMI rose to 56.0 in February, compared to market expectations of a rise to a level of 56.2. The preliminary figures had recorded an advance to 56.2. In the previous month, the services PMI had recorded a revised reading of 54.2.

In the Asian session, at GMT0400, the pair is trading at 1.1294, with the EUR trading 0.07% lower against the USD from yesterday's close.

The pair is expected to find support at 1.1276, and a fall through could take it to the next support level of 1.1259. The pair is expected to find its first resistance at 1.1325, and a rise through could take it to the next resistance level of 1.1357.

Going forward, investors would keep an eye on the Eurozone's OECD interim economic outlook along with Germany's Markit construction PMI for February, slated to release in a few hours. Later in the day, the US trade balance for December and the ADP employment change for February, will keep investors on the toes. Additionally, the Federal Reserve's Beige Book release, due later today, will garner significant amount of investor attention.

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

For the 24 hours to 23:00 GMT, the GBP declined 0.20% against the USD and closed at 1.3154, amid persistent uncertainty over Brexit.

On the data front, the Markit services PMI unexpectedly rose to a level of 51.3 in February, defying market expectations for an unchanged reading. In the previous month, the services PMI had recorded a reading of 50.1.

In the Asian session, at GMT0400, the pair is trading at 1.3135, with the GBP trading 0.14% lower against the USD from yesterday's close.

The pair is expected to find support at 1.3089, and a fall through could take it to the next support level of 1.3043. The pair is expected to find its first resistance at 1.319, and a rise through could take it to the next resistance level of 1.3245.

With no macroeconomic releases in the UK today, investor sentiment would be determined by global macroeconomic news.

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

Daily Pivots: (S1) 1.1284; (P) 1.1313; (R1) 1.1338; More.....

EUR?USD's break of 1.1316 support indicate completion of rebound from 1.1234. Intraday bias is turned to the downside for retesting 1.1215 low. Decisive break there will resume larger down trend from 1.2555. On the upside, above 1.1345 minor resistance will turn bias to the upside for 1.1419 resistance to extend the consolidation from 1.1215.

In the bigger picture, as long as 1.1814 resistance holds, down trend down trend from 1.2555 medium term top is still in progress and should target 61.8% retracement of 1.0339 (2017 low) to 1.2555 at 1.1186 next. Sustained break there will pave the way to retest 1.0339. However, break of 1.1814 will confirm completion of such down trend and turn medium term outlook bullish.

Daily Pivots: (S1) 1.3118; (P) 1.3158; (R1) 1.3218; More....

Focus stays on 1.3109 support in GBP/USD. Firm break will be an early sign of near term reversal and bring deeper fall to trend line support (now at 1.2944). Break will target 1.2774 support to confirm completion of rebound from 1.2391. Nevertheless, rebound from current level, followed by break of 1.3350, will resume rise from 1.2391 to 61.8% retracement of 1.4376 to 1.2391 at 1.3618 next.

In the bigger picture, medium term decline from 1.4376 (2018 high) should have completed at 1.2391. Rise from 1.2391 is now seen as the third leg of the corrective pattern from 1.1946 (2016 low). Further rise could be seen through 1.4376 in medium term. On the downside, though, break of 1.2773 support will turn focus back to 1.2391 low and then 1.1946.

For the 24 hours to 23:00 GMT, the USD rose 0.12% against the JPY and closed at 111.88.

In the Asian session, at GMT0400, the pair is trading at 111.77, with the USD trading 0.10% lower against the JPY from yesterday’s close.

The pair is expected to find support at 111.62, and a fall through could take it to the next support level of 111.47. The pair is expected to find its first resistance at 112.03, and a rise through could take it to the next resistance level of 112.29.

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

For the 24 hours to 23:00 GMT, the USD rose 0.53% against the CHF and closed at 1.0045.

Data showed that Switzerland’s consumer price index rose 0.6% on a yearly basis in February, in line with the market expectations.

In the Asian session, at GMT0400, the pair is trading at 1.0054, with the USD trading 0.09% higher against the CHF from yesterday’s close.

The pair is expected to find support at 1.0013, and a fall through could take it to the next support level of 0.9972. The pair is expected to find its first resistance at 1.0075, and a rise through could take it to the next resistance level of 1.0096.

Amid no macroeconomic releases in Switzerland today, investor sentiment would be governed by global macroeconomic factors.

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

Daily Pivots: (S1) 0.9999; (P) 1.0027; (R1) 1.0073; More...

USD/CHF's break of 1.0024 resistance indicates that corrective pull back from 1.0098 has completed at 0.9926 already. Intraday bias is back on the upside for retesting 1.0098 first. Break will target 1.0128 key resistance. On the downside, below 0.9997 minor support will turn bias back to the downside to extend the correction from 1.0098 instead.

In the bigger picture, USD/CHF drew strong support from medium term trend line and rebounded. That suggests rise from 0.9186 is still in progress. Further break of 1.0128 will confirm up trend resumption and target 1.0342 key resistance. Nevertheless, break of 0.9716 will dampen this bullish view and at least bring deeper fall to 0.9541 key support.