Sample Category Title

EURUSD is currently building another tiny red candle within the strong boundaries of 1.1400 and 1.1356. Technically, the pair could continue to slide sideways as long as the RSI fluctuates around its 50 neutral mark and the MACD barely moves around zero and its red signal line. The falling 20-day moving average (MA) though, could be a negative sign that the rebound on the 3-month low of 1.1233 has probably come to an end.

The 23.6% Fibonacci of 1.1356 of the downleg from 1.1814 to 1.1214 was rejecting bearish movements the previous week and therefore should be in focus if the market comes under renewed selling pressure. Below that area, the price could overcome the 20-day MA to challenge support between 1.1300 and 1.1265, while lower the bears could bottom at 1.1214.

Alternatively, a reversal to the upside could initially test the 1.1400 resistance and then the 38.2% Fibonacci of 1.1444. Moving higher, all eyes will shift to 1.1500, where the 200-day MA meets the 50% Fibonacci. Should the market clear this area and more importantly violate the 1.1569 peak, steeper gains could follow, with the neutral medium-term picture switching to bullish as well.

Summing up, EURUSD holds a neutral profile both in the short and medium-term picture.

• Rates: Back loaded eco/event calendar
  Asian stock markets profit this morning from rumours that China and the US are in the final stage of completing a trade deal. Both parties are reportedly ready to drop tariffs. Risk sentiment will cause intraday gyrations in a low-volume trading session on bond markets. The eco/event calendar is backloaded with EMU PMI’s, ECB meeting, US ISM, ADP and payrolls.
• Currencies: Dollar holing (relatively) strong despite mixed US data
  EUR/USD failed to regain the 1.14 mark on Friday even as the US manufacturing ISM disappointed. At the start of this week, the picture for EUR/USD trading looks more balanced. Further gains in the 1.12/1.15 range will probably need more positive news from the EMU (or ECB) or softer US data. The recent sterling rally is falling prey to (modest) profit taking

The Sunrise Headlines

• US equity markets gained ground on Friday with technology shares outperforming (Nasdaq +0.83%). Asian equities are largely trading higher this morning as the US and China seem close to a trade deal.
• The US and China are said to be close to a trade deal. Most or all US tariffs could be lifted as Beijing made pledges on structural economic changes. President’s Trump and Xi Jinping are said to hold a summit at the end of March.
• US President Trump said the US dollar is too strong, as it is prohibitive for doing business with other nations. He also blamed Federal Reserve chief Powell for raising interest rates and quantitative tightening.
• Support for UK PM May’s Brexit deal is growing as key Tories and pro-Brexit hardliners signal they could swing behind the deal in exchange for certain conditions. UK Parliament will vote on the deal next Tuesday.
• The Basel Committee on Banking Supervision has called for external checks on the riskiness of banks’ loans. The global rule-setter for financial regulations wants to minimise the scope for errors or cheating in risk calculations.
• Rating agency Moody’s has raised Greece’s sovereign credit rating by two levels from B3 to B1 with a stable outlook. Moody’s states that the ongoing reform efforts are starting to bear fruit in the economy.
• Today’s US eco calendar is only contains second tier eco data with EMU producer price inflation, the UK construction PMI and US construction spending.

Currencies: Dollar Holing (Relatively) Strong Despite Mixed US Data

USD remains well bid despite mediocre US data.

EMU data printed mixed to slightly stronger than expected on Friday, but with little direct impact on EUR/USD trading. The dollar traded with a tentative soft bias early in US dealings. Later, the manufacturing ISM missed expectations and the details weren’t convincing. Still, USD losses were temporary and modest. EUR/USD revisited the 1.14 area, but soon turned back south. A rebound of US equities and a rise in US yields in the end even tilted the balance back in favour of the dollar. EUR/USD closed marginally lower at 1.1365. USD/JPY rallied further to finish at 111.89.

This morning, sentiment on Asian equity markets is risk-on. Optimism is fuelled by press reports that the US and China are close to a trade deal. In this deal, most of the US import tariffs on Chinese goods might be removed. The yuan gains modest ground, EUR/USD and USD/JPY show no clear trend. USD/JPY (high 111 area) is holding near recent top. EUR/USD hovers in the 1.1360 area. In a speech for a conservative party audience, US president Trump again blamed Fed’s Powell for keeping yields and the dollar too strong.

There are few important eco data today. Later this week, USD traders will look out both for European and US data. The latter include the non-manufacturing ISM (tomorrow), ADP (Wednesday) and the payrolls (Friday). Guidance from the ECB policy meeting on Thursday might be important for the next directional move of the euro.

Over the previous two weeks, EUR/USD started a gradual rebound as EMU data showed signs of a tentative bottoming. The ECB also indicated that there might still be room to start some kind of policy normalisation. This narrative supported EUR/USD. End last week, the EUR/USD rise did run into resistance on (some) constructive US data. At the start of this week, the picture for EUR/USD is balanced. The 1.14 area looks quite a solid resistance. More EUR/USD gains in the 1.12/15 range are possible, but such a move probably needs more good news from Europe or poor US data (and a halt of recent rise in US yields). For now, we see no immediate trigger for such a break. So, some consolidation on recent EUR/USD gains might be on the cards.

Profit taking on recent sterling rally continued last Friday. The risk of a no-deal Brexit declined of late but this development was apparently discounted, causing ST players to take some profit on sterling long. Brexit headlines might still be a bit less dominant for sterling trading than was the case of late. If markets grow more convinced on an orderly Brexit, UK data and the chances for a BoE rate hike might become more important for sterling. Until data bring more clarity, sterling might maintain recent gains. The profit taking move shouldn’t go that far.

EUR/USD: rally running into resistance as (some) US data restore balance

Market movers today

We have an interesting week ahead of us with the ECB meeting Thursday and the US employment report on Friday. Focus at the ECB meeting will be new growth and inflation projections and any news on a potential new TLTRO liquidity measure. For those waiting on the latter, we expect they may very well be in for a disappointment

When it comes to the US jobs report on Friday, we look for robust wage growth whereas job growth seem to be off its peak.

US-China trade talks will also continue to create headlines and we should look out for a potential date for a Xi-Trump meeting.

Finally, this week, China has the annual National People's Congress where among other things new GDP and inflation targets are set to be announced. It is widely expected that the growth target for 2019 will be 6-6½%.

Today we will have the Euro Sentix sentiment survey and Danish currency reserve data. The latter will show whether Nationalbanken intervened again to defend the DKK.

Selected market news

Asian stocks, US futures and the Yuan are gaining this morning after a Wall Street Journal reported yesterday saying that a US-China deal is close to being finalised. A deal is said to include lifting US tariffs on USD200bn worth of Chinese goods. In order to facilitate a deal, China is reported to be offering to lower tariffs on US farm goods, chemicals and automobile imports as well as other technical measures including reducing government subsidies. As we wrote on Friday, US negotiators are targeting a meeting between Trump and Xi in mid-March, where a final deal could be signed.

Trump's comments on Saturday at the Conservative Political Action Conference that the dollar was getting too strong initially weighed on the USD in early sessions, weakening slightly against the EUR. However, the greenback drifted stronger again and is now trading unchanged from Friday's close. Trump also (again) lashed out at Fed Chair Powell after sentiment seemed to have gotten better between the two, after the Fed's recent comments to conduct a more data dependent monetary policy.

The recent slowdown of the Chinese economy and its weighing on the global growth outlook has most of the world turned to Beijing this week as the National People's Congress gets underway and will last for the next two weeks. This year's session could show some contrast between central government spending plans and local administrations' working realities as a Financial Times report said that provincial governments plan to cut spending by on average 5% amid slowing revenue growth. On the other hand, the Xi administration plans on continuing expansionary fiscal policy through tax cuts and infrastructure projects.

General Trend:

• US said to be considering removing most if not all of the sanctions imposed on Chinese goods since 2018, trade deal with China could be reached at summit around March 27th (US financial press article)
• China reiterates substantial progress made in US trade talks
• Trump/Kim summit ends early, Trump says Kim not ready to accept great deal
• Gains in China supported by the IT, Telecom Services and Property sectors
• Machinery, Electric Appliance and Securities firms rise in Japan
• Fast Retailing's upcoming Feb sales figures in focus
• Rakuten rises over 5% after LYFT filed for IPO, Softbank rises over 3%
• Nikkei Futures rise amid contract roll
• Consumer Staples companies outperform in Australia
• Australia Q4 inventories unexpectedly decline, Q4 GDP data due on March 6th (Wed)
• On Tuesday (March 5th), China Premier Li is expected to issue the main economic targets
• Reserve Bank of Australia (RBA) due to hold policy decision on Tuesday (March 5th)

Headlines/Economic Data

Japan

• Nikkei 225 opened +1.0%
• (JP) Japan Feb Monetary Base y/y: 4.6% v 4.7% prior; Monetary Base End of Period: ¥497.3T v ¥500.2T prior
• 3382.JP Seven-Eleven plans to test shorter hours in Japan amid labor shortages - Japanese Press
• (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates will discuss exit strategy at appropriate time, will debate and communicate exit strategy at the right time; Currently difficult to reach 2% within outlook period (FY20)
• (JP) Japan Economy Min Motegi: Do not have timing with US on trade talks, talks will be mostly focused on goods
• (JP) Japan Chief Cabinet Sec Suga: Not true that Japan aided Nissan/Renault merger resistance
• (JP) Japan PM Abe: Trust BOJ Govt Kuroda ability to run monetary policy, leave concrete steps up to him to adopt

Korea

• Kospi opens +0.7%
• (KR) South Korea Feb Manufacturing PMI: 47.2 v 48.3 prior (lowest since June 2015); New export orders contract for the 7th consecutive month; New orders 44.9 v 47.0 prior (largest decline since June 2015)
• (KR) DoD reportedly preparing to announce that annual large joint military exercises with South Korea will no longer be held - NBC News
• (US) Pres Trump: North Korea has a bright economic future if it gives up nukes; will get other countries to provide aid if a deal works out - CPAC speech
• (KR) National Sec Adviser Bolton: Sanctions will continue on North Korea following Trump/Kim summit; Kim wasn't ready to accept Trump's "big deal" – press
• (KR) South Korea Vice Fin Min: Will act to stabilize markets if needed, though Govt sees limited impact on markets from result of Hanoi summit
• (KR) US and South Korea will launch the new Dong Maeng combined exercise this week to replace their springtime Key Resolve drills – Yonhap
• (KR) Bank of Korea (BOK) Breakdown of US/North Korea talks not expected to have big impact; to closely monitor markets and foreign fund flows

China/Hong Kong

• Hang Seng opens +0.2%; Shanghai Composite opens +0.7%
• (US) Pres Trump asks China to immediately remove all tariffs on US agricultural products " based on the fact that we are moving along nicely with Trade discussion" and that the US didn't raise tariffs to 25%
• Trump tweets: "I have asked China to immediately remove all Tariffs on our agricultural products (including beef, pork, etc.) based on the fact that we are moving along nicely with Trade discussions.......and I did not increase their second traunch of Tariffs to 25% on March 1st. This is very important for our great farmers - and me!"
• (CN) China said to have offered US to lower tariffs on US farm goods, autos and other goods; US considering removing most if not all of the sanctions imposed against Chinese products since last year; close to a final agreement on trade - US press
• (CN) China PBOC Open Market Operation (OMO): Skips OMO v skipped prior (3rd consecutive skip); Net: CNY40B drain v CNY40B prior
• (CN) China PBoC sets Yuan Reference Rate: 6.7049 v 6.6901 prior

Australia/New Zealand

• ASX 200 opened +0.2%
• (AU) AUSTRALIA JAN BUILDING APPROVALS M/M: 2.5% V 1.5%E; Y/Y: -28.6% V -28.9%E
• (AU) AUSTRALIA Q4 COMPANY OPERATING PROFIT Q/Q: 0.8% V 3.0%E; INVENTORIES SA Q/Q: -0.2% V 0.3%E
• OSH.AU Affirms FY19 production 28.0-31.5MMBOE; in advanced talks on Armstrong option and divestment
• (AU) Australia Feb Melbourne Institute Inflation m/m: +0.1% v -0.1% prior; y/y: 1.7% v 1.5% prior
• (AU) Australia and Indonesia to sign Free Trade Agreement today; expected to boost AU cattle industry; ID textiles, auto parts and timber exports - Local Press

Other Asia

• (TW) Taiwan Feb Manufacturing PMI:46.3 v 47.5 prior (lowest in 3.5 years)

North America

• (US) Over the weekend, US President Trump said the Fed's tight monetary policy was contributing to a strong dollar, hurting the US' competitiveness - financial press
• TSLA Will unveil Model Y, the all-electric crossover based on Model 3, March 14th in LA
• TNXP FDA rescinds Breakthrough Therapy designation (BTD) granted for Tonmya for PTSD in December 2016 because interim analysis data

Europe

• (IE) Ireland Feb Consumer Confidence Index: 86.5 v 98.8 prior (6-yr low)
• (UK) UK Attorney General (AG) Cox has ended attempts to secure a hard time-limit or unilateral exit mechanism for the Ireland backstop - UK Telegraph
• (UK) Labour party Finance spokesperson John McDonnell: Labour Party does not want a second Brexit referendum, have been forced into supporting one by PM May who is running down the clock on negotiations - press

Levels as of 1:00ET (06:00GMT)

• Hang Seng +0.8%; Shanghai Composite +1.7%; Kospi -0.2%; Nikkei225 +1.0%; ASX 200 +0.4%
• Equity Futures: S&P500 +0.3%; Nasdaq100 +0.5%, Dax +0.2%; FTSE100 -0.0%
• EUR 1.1359-1.1382; JPY 111.76-112.02; AUD 0.7080-0.7110; NZD 0.6802-0.6828
• Commodity Futures: Gold -0.3% at $1,294/oz; Crude Oil +0.3% at $55.98/brl; Copper +0.6% at $2.94/lb

Daily Pivots: (S1) 126.71; (P) 127.11; (R1) 127.61; More....

Intraday bias in EUR/JPY remains on the upside with 126.60 minor support intact. Current rally from 118.62 should target 61.8% retracement of 137.49 to 118.62 at 130.28 next. On the downside, break of 126.60 minor support will turn intraday bias neutral and bring consolidations first. But downside of retreat should be contained by 124.23/125.95 support zone to bring rise resumption.

In the bigger picture, current development argues that medium term decline from 137.49 (2018 high) has completed with three waves down to 118.62 already. Decisive break of 133.12 resistance will confirm this bullish case. And whole up trend from 109.03 (2016 low) might resume through 137.49 in that case. On the downside, break of 124.23 support will invalidate this case and turn focus back to 118.62 instead.

For the 24 hours to 23:00 GMT, the EUR declined 0.11% against the USD and closed at 1.1371 on Friday.

Data indicated that the Euro-zone's unemployment rate remained steady at a 10-year low rate of 7.8% in January, compared to market consensus for a rise to 7.9%. Meanwhile, the region's flash consumer price index (CPI) advanced 1.5% in February, meeting market expectations. The CPI had registered a rise of 1.4% in the prior month. On the other hand, the nation's final manufacturing PMI contracted for the first time since June 2013 to level of 49.3 in February, compared to a reading of 50.5 in the prior month. The preliminary figures and market participants had indicated the PMI to drop to a level of 49.2.

Separately, in Germany, the seasonally adjusted unemployment rate remained unchanged at 5.0% in February, in line with market expectations. Moreover, retail sales rose 2.6% on a yearly basis in January, compared to a revised fall of 1.6% in the previous month. Market participants had envisaged theretail sales to advance 1.2%. Meanwhile, the nation's final manufacturing PMI declined to a 74-month low level of 47.6 in February, at par with market expectations and confirming the preliminary print. In the prior month, the manufacturing PMI had recorded a reading of 49.7.

In the US, data showed that the US final Markit manufacturing PMI slid to an 18-month low level of 53.0 in February, amid decline in new order growth and compared to a level of 54.9 in the previous month. The preliminary figures and market participants had indicated the PMI to drop to a level of 53.7. Further, the nation's ISM manufacturing activity index fell to a level of 54.2 in February, expanding at its weakest pace in two years and more than market expectations for a decline to a level of 55.7. In the previous month, the index had recorded a reading of 56.6. Additionally, personal spending fell 0.5% on a monthly basis in December, more than market consensus for a fall of 0.2%. Personal spending had registered a gain of 0.4% in the previous month. Furthermore, personal income unexpectedly fell 0.1% on a monthly basis in January, declining for the first time in 3-years, amid descending dividends and interest payments. In the prior month, the personal spending had recorded a gain of 1.0%.

On the flipside, the US final Reuters/Michigan consumer sentiment index climbed to a level of 93.8 in February, compared to a level of 91.2 in the previous month. Market participants and the preliminary figures had expected the index to rise to a level of 95.5.

In the Asian session, at GMT0400, the pair is trading at 1.1367, with the EUR trading 0.08% higher against the USD from Friday's close.

The pair is expected to find support at 1.1344, and a fall through could take it to the next support level of 1.1320. The pair is expected to find its first resistance at 1.1400, and a rise through could take it to the next resistance level of 1.1432.

Moving ahead, traders would await the Euro-zone's Sentix investor confidence index for March and the producer price index for January, set to release in a few hours. Later in the day, the US construction spending data for December, will garner significant amount of investor's attention.

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

Daily Pivots: (S1) 147.38; (P) 147.98; (R1) 148.44; More...

Intraday bias in GBP/JPY remains neutral for consolidation below 148.57 temporary top. Downside of retreat should be contained by 144.84 resistance turned support to bring rise resumption. On the upside, break of 148.57 will target 149.48 resistance first. Decisive break there will target 100% projection of 131.51 to 144.84 from 141.00 at 154.33 next.

In the bigger picture, the strong rebound from 131.51 suggests that medium term fall from 156.59 (2018 high) has completed already. The corrective structure of such decline in turn argues that it's the second leg of the corrective pattern from 122.36 (2016 low). And this pattern is starting the third leg. On the upside, decisive break of 149.48 will pave the way to 156.59 resistance and above.

For the 24 hours to 23:00 GMT, the GBP declined 0.61% against the USD and closed at 1.3181 on Friday.

On the data front, UK's manufacturing PMI declined to a level of 52.0 in February, marking its lowest level in four-months and weighed down by looming Brexit uncertainties. In the prior month, the PMI had recorded a revised reading of 52.6. Meanwhile, Britain's mortgage approvals for house purchases unexpectedly climbed to a level of 66.8K in January. In the preceding month, the mortgage approvals had registered a revised level of 64.5K. Furthermore, the nation's net consumer credit recorded a rise of £1.1 billion in January, compared to a revised rise of £0.7 billion in the prior month. Market participants had expected the net consumer credit to record a gain of £0.8 billion.

In the Asian session, at GMT0400, the pair is trading at 1.3240, with the GBP trading 0.45% higher against the USD from Friday's close.

The pair is expected to find support at 1.3179, and a fall through could take it to the next support level of 1.3119. The pair is expected to find its first resistance at 1.3293, and a rise through could take it to the next resistance level of 1.3347.

Trading trend in the British Pound today, is expected to be determined by UK's Markit construction PMI for February, set to release in a few hours.

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

For the 24 hours to 23:00 GMT, the USD rose 0.55% against the JPY and closed at 112.00 on Friday.

In the Asian session, at GMT0400, the pair is trading at 111.99, with the USD trading marginally lower against the JPY from Friday’s close.

The pair is expected to find support at 111.73, and a fall through could take it to the next support level of 111.46. The pair is expected to find its first resistance at 112.17, and a rise through could take it to the next resistance level of 112.34.

Moving forward, traders would closely monitor Japan’s Nikkei services PMI for February, slated 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 0.17% against the CHF and closed at 0.9996 on Friday.

In economic news, Switzerland's SVME manufacturing PMI surprisingly climbed to a level of 55.4 in February, defying market consensus for a fall to a level of 53.5. In the previous month, the PMI had recorded a reading of 54.3. Meanwhile, the nation's real retail sales unexpectedly slid 0.4% on an annual basis in January, compared to a revised drop of 0.2% in the previous month. Market participants had expected the retail sales to record a rise of 0.4%.

In the Asian session, at GMT0400, the pair is trading at 0.9994, with the USD trading a tad lower against the CHF from Friday's close.

The pair is expected to find support at 0.9968, and a fall through could take it to the next support level of 0.9943. The pair is expected to find its first resistance at 1.0014, and a rise through could take it to the next resistance level of 1.0035.

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