Sample Category Title

• Rates: Fragile risk sentiment may support core bonds
  Risk sentiment deteriorated towards the end of Asian dealings as the Pakistani/Indian conflict escalates. German Bundesbank president Weidmann presents the annual report, with special attention to the outlook. EMU EC economic confidence is expected to stabilize in line with the composite PMI. We remain cautiously positive for core bonds.
• Currencies: EUR/USD trading higher in the 1.12/1.15 trading range.
  The dollar faced different drivers. In the end, the USD currency broke some minor support levels as Fed's Powell repeated recent wait-and-see approach. EUR/USD tested the 1.14 area. Today, the eco calendar is not that enticing. Some further by default USD selling might continue. Sterling is holding strong even as a no deal Brexit is still an option

The Sunrise Headlines

• US equity markets lost negligible ground yesterday with the DJI (-0.13%) underperforming. Asian equities are giving up gains this morning after Pakistan said to have shot down Indian aircrafts.
• The US House of Representatives voted to block President Trump's border emergency declaration. If the resolution now passes the US Senate too, president Trump will likely override the decision with a presidential veto.
• Pakistan shot down two Indian aircrafts within Pakistani airspace, in a dramatic escalation a day after the Indian Air Force bombed a terrorist training camp in Pakistan. The Nifty fifty reversed earlier gains and falls 0.5% on the day.
• Luigi Di Maio, Italian deputy PM and 5SM leader, said the party's poor results in regional elections (e.g. Abbruzio, Sardinia) has no impact on the Italian government after rumours that coalition partner Lega would call early elections.
• The US seeks support from EU leaders to back the US nomination, David Malpass, to head the World Bank. Malpass is a known sceptic of multilateral institutions. EU leaders will look for assurances, e.g. on climate change policy.
• Nigerian President Buhari won for the second time the presidential elections, who were afflicted with delays, technical problems and at least 39 deaths. The opposition People's Democratic Party called the vote “manipulated”.
• Today's eco calendar contains the EMU Economic Confidence gauge (Feb). The UK votes on May's new proposal and Fed chairman Powell speaks. US president Trump meets North Korean leader Kim Jong Un in Vietnam

Currencies: EUR/USD Trading Higher In The 1.12/1.15 Trading Range

EUR/USD creeping higher in the 1.12/1.15 range

The dollar was pushed back and forth by divergent drivers yesterday. US data were mixed with poor housing starts but a solid consumer confidence. The latter supported an intraday USD rebound. Later, chairman Powell reiterated recent Fed mantra that caution on policy should prevail as the Fed wants to see how global headwinds will affect the US economy. The dollar initially held strong, but in the end USD/JPY and EUR/USD broke beyond first minor support/resistance. At the same time, the euro was supported by comforting comments from ECB's Lane. EUR/USD tested the 1.14 big figure and closed at 1.1389. USD/JPY finished at 110.59, well of recent 111+ ST peak levels. This morning, most Asian indices are trading mixed-to-positive even as US indices failed to preserve initial gains. A soft dollar and cautious Fed approach in the end are not that bad for emerging markets. BOJ's Kataoka, a well-known dove, said further (monetary and fiscal) stimulus is needed to reach the inflation target. BOJ's Kuroda sounded more balanced, but also admitted the BOJ has to keep policy easy (including ETF buying). For now, the soft BOJ comments didn't weaken the yen. USD softness prevails. USD/JPY hovers in the mid 110 area. EUR/USD is trading in the 1.1375 area.

Today, EC confidence is expected to confirm recent sluggish momentum in the EMU economy. A positive surprise isn't evident, but if so, it might support a euro constructive sentiment. US data (trade balance and inventories) will probably only be of intraday significance. USD traders will keep an eye at the Q&A of Powell's testimony before the House. We started this week with a cautious bias on the US dollar as the US currency mighty become (slightly) more sensitive to soft US data and their impact on Fed policy. Last week, EUR/USD rebounded off recent lows, but with no strong momentum. Any EUR/USD rebound will develop a slowly as long as EMU data stay unconvincing. Still, yesterday's break beyond 1.1370 might open the way for further gains in the 1.12/1.15 ST consolidation pattern.

The sterling rebound initially took a breather yesterday, after UK PM May didn't formally exclude a no-deal brexit. However, the pause in the sterling rebound was temporary. Later in the session, the unwinding of sterling shorts continued. Today, the political debate on Brexit in the UK parliament will continue, but we don't expect material changes to the Brexit road as painted by UK PM May yesterday. Of late, sterling profited receding chances on a no-deal Brexit. We find that poltical event risk is a bid underestimated, but for now, the sterling up-trend (EUR/GBP decline looks) solid. EUR/GBP is drifting below the 0.8620/00 support.

EUR/USD testing the 1.14 big figure.

AUDUSD has been moving slightly sideways since the strong rebound on the decade low of 0.6746 on January 3. The pair has found significant resistance at the 38.2% Fibonacci retracement level of the downleg from 0.8135 to 0.6746 around 0.7275. In the short-term, the market could continue consolidating if the red Tenkan-sen and the blue Kijun-sen lines keep flattening below the current market price.

Regarding the technical indicators in the daily timeframe, the RSI remains flat as well near the neutral threshold of 50, while the MACD is weakening its momentum marginally above the zero line. Both are confirming the neutral structure in the price action.

Should the pair stretch north, the 38.2% Fibonacci mark of 0.7275 could provide support before the price touches the 0.7340 barrier, taken from the highs on November 2018. A step higher could bring the bullish sentiment back into play, sending the price probably towards 0.7390, which was a critical level back in December 2018.

On the other side, the minor bullish crossover of the 20- and 40-simple moving averages (SMAs) may halt downside movements currently at 0.7150. If traders continue to sell the pair, the price could fall until the 23.6% Fibonacci of 0.7070 and then until 0.7050, while steeper declines could send the market to rest near the 0.6825 support, registered on January 2016.

In the medium-term, AUDUSD is stable in a neutral mode confirmed by the flattening 50-day SMA suggesting that the sideway mode may not change any time soon.

Bitcoin is coming under increasing selling pressure after the number one cryptocurrency was strongly rejected from the $4,000 level. Technical indicators on the four-hour time are still turning lower, which may signal further losses ahead for the BTCUSD pair. Traders should note that the BTCUSD pair will only turn short-term bearish if price trades below the $3,700 level.

The BTCUSD pair is bullish while trading above the $3,700 level, key technical resistance is now found at the $4,000 and $4,300 levels.

If the BTCUSD pair trades below the $3,700 level, key support is found at the $3,550 and $3,330 levels.

The euro has risen to a fresh monthly high against the US dollar after the US dollar came under pressure following Federal Reserve Chair Jerome Powell’s testimony on Capitol Hill. The EURUSD pair has broken back inside the rising price channel on the four-hour time frame, with the 1.1400 level now key resistance. Traders should expect further intraday upside in the EURUSD pair while price continues to trade above the 1.1375 level.

The EURUSD pair is strongly bullish while trading above the 1.1375 level, key resistance is found at the 1.1400 and 1.1450 levels.

If the EURUSD pair trades below the 1.1375 level, key support is found at the 1.1360 and 1.1337 levels.

The British pound has risen to its highest trading level against the US dollar since September 2018, after British Prime Minister Theresa May confirmed that Article 50 could be extended for a limited period. The GBPUSD pair has pulled back slightly from the 1.3300 resistance area, although the strong intraday bullish bias will remain intact while price trades above the 1.3200 level. Traders should note that an inverted head and shoulders pattern has formed, with the neckline of the bullish pattern located just above the 1.3300 level.

The GBPUSD pair has a strongly bullish bias while trading above the 1.3200 level, key technical resistance is found at the 1.3300 and 1.3350 levels

If the GBPUSD pair trades below the 1.3200 level, sellers may test towards the 1.3160 and 1.3095 support levels.

Pound sterling continued to rise in overnight trading as traders grew confident that the country will avoid a no-deal Brexit. In a speech to Parliament yesterday, Theresa May said that she was prepared to ensure that the country avoided a scenario where a deal wasn’t agreed. In recent days, the Prime Minister has been under intense pressure from members of her own party. Pro-EU Conservatives had threatened to resign in protest of a no-deal Brexit. This decision came after a secret government report showed that the country’s economy would be significantly affected in case it leaves without a deal. Today, traders will continue to focus on the progress of these talks.

Yesterday, the Fed chair testified before Congress and reaffirmed his previous views that the economy was doing well. However, he reiterated the views of the central bank that the world economy faced significant risks. He talked about the slow growth in China and Europe and the continued risks of a no-deal Brexit. He also repeated that the bank will take a patient approach to interest rates. Today, he will continue to testify before congress.

The price of crude oil rose slightly after data from the American Petroleum Institute (API) showed slowing inventories from the US. In the past week, inventories declined by 4.2 million barrels. This was after a 1.26 million barrels increase in the previous week. Later today, the EIA will release its inventories data that’s expected to show an increase of 2.842 million barrels. This will still be lower than last week’s increase of 3.6 million barrels.

EUR/USD

The EUR/USD pair rose after yesterday’s Fed chair statement. The pair reached an intraday high of 1.1400. This was a higher level than the 21-day and 42-day moving averages. The RSI has moved close to the overbought level of 70 while the ADX is at 21. The pair could remain along these levels since there is no major expected economic data.

XBR/USD

The price of Brent crude rose from this week’s low of $64.50 to a high of $65.70. On the four-hour chart, the pair’s price is slightly below the 21-day and 42-day moving averages. After falling to the oversold territory, the RSI has moved up to the current level of 46 while the Relative Vigor Index (RVI) is edging closer to the neutral level. The pair could continue moving upwards because even with Trump’s tweet, nothing fundamental changed about the oil market.

GBP/USD

The GBP/USD pair remained close to the YTD high of 1.3288 as traders waited for the next action by Theresa May. On the daily chart, the pair is above all the short and medium-term moving averages. At the same time, the RSI has moved close to the overbought level of 70. The pair’s movements today will depend mostly on the statements that emerge concerning Brexit.

Daily Pivots: (S1) 1.3137; (P) 1.3187; (R1) 1.3220; More...

USD/CAD's recovery was limited below 1.3242 minor resistance and intraday bias remains neutral first. On the upside, above 1.3242 support will turn bias back to the upside for 1.3340 resistance first. Break will complete head and should bottom pattern (ls: 1.3180, h: 1.3068, rs: 1.3112). In that case, further rise should be seen back to 1.3664 resistance. On the downside, decisive break of 1.3068 low will firstly resume whole fall from 1.3664. Secondly, it will be a strong sign of medium term bearish reversal.

In the bigger picture, structure of the medium term rise from 1.2061 (2017 low) to 1.3664 is not clearly impulsive. Hence, we'd stay cautious on strong resistance from 61.8% retracement of 1.4689 (2016 high) to 1.2061 at 1.3685 and 1.3793 resistance to limit upside, and bring medium term topping. But in any case, medium term outlook will stay bullish as long as channel support (now at 1.3099) holds. Sustained break of 1.3793 will pave the way to retest 1.4689 (2015 high). Firm break of the channel support should confirm reversal target 1.2061 low again.

Pound surges as May seeks to hold off rebellion a little longer

This was meant to be the day to watch this week, as MPs head back to Parliament to have a “meaningful vote” on Theresa May’s deal and put forward any amendments.

Unfortunately, May had other plans this week and not only cancelled the vote on her deal before the week even got underway, but also pre-empted the rebellion on Tuesday by proposing a vote on no-deal and an extension on 13 and 14 March, coincidentally – I’m sure – the same time that others were proposing forcing through an extension request with Brussels.

As ever in the world of politics, this is nothing more than a game of strategy, with the Prime Minister doing whatever it takes to cling onto her deal and position long enough to see it over the line, whatever it takes in the interim. For now it would appear she is succeeding and the latest move may not only have kept MPs at bay for a couple more weeks but also given a lift to the markets.

What’s not to like? The opposition Labour Party has been forced into backing a second referendum out of fear of losing more MPs to the newly formed Independent Group – revitalising an option that potentially opens the door to remaining in the EU – and May has put a major obstacle in the way of no deal, great news for the pound which fears that option more than anything else. Still, it remained below 1.33 against the dollar, the upper end of a range it’s held since the middle of last year and one that may only be broken when a significant step forward is achieved or no-deal is taken off the table altogether.

Gold consolidates but looks potentially vulnerable near-term

There isn’t much new to report on gold, which has been stuck in consolidation over the last few days and is showing little sign of sparking back to lift. The yellow metal is potentially looking a little overbought at this point, with the dips clearly not being bought as convincingly, dollar softness not spurring it on and the momentum indicators showing weakness. This near-term outlook could therefore be a little more bearish, with $1,320 being the next level of support and $1,300 below that.

Daily Pivots: (S1) 0.7154; (P) 0.7174; (R1) 0.7208; More...

Intraday bias in AUD/USD remains neutral at this point. On the downside, decisive break of 0.7054 support should confirm completion of rebound from 0.6722. Further decline should then be seen to 61.8% retracement of 0.6722 to 0.7295 at 0.6941 next. On the upside, though, break of 0.7206 will turn focus back to 0.7295 resistance instead.

In the bigger picture, as long as 0.7393 resistance holds, we'd treat fall from 0.8135 as resuming long term down trend from 1.1079 (2011 high). Decisive break of 0.6826 (2016 low) will confirm this bearish view and resume the down trend to 0.6008 (2008 low). However, firm break of 0.7393 will argue that fall from 0.8135 has completed. And corrective pattern from 0.6826 has started the third leg, targeting 0.8135 again.

General Trend:

• CME due to technical issues had to stop trading in all markets, issue later identified and resolved
• Spot Silver spikes over 4% in Asian trading, later reverses gain
• Banks outperform in China
• Gainers in Japan include Real Estate companies, Fast Retailing
• Financial and Energy companies rise in Australia
• Australia Q4 construction work done data unexpectedly declined, Q4 GDP data due on March 6th (Wed)
• Hong Kong GDP contracts in Q4, government pledges to launch support measures
• Australia Q4 Capex data due for release on Thursday, along with China official Feb PMIs

Headlines/Economic Data

Japan

• Nikkei 225 opened +0.3%
• 4755.JP Japan FTC to investigate the rebate systems of Rakuten and Yahoo Japan - Japanese Press
• 9697.JP Game Resident Evil 2 has shipped 4M units globally
• 7267.JP Reports Jan Global Production 476.2K Units, +0.5% y/y
• (JP) Bank of Japan (BOJ) Board Member Kataoka: longer monetary easing brings more side effects; disagrees with view that BOJ should persistently continue with easing to reach price goal
• (JP) Bank of Japan (BOJ) Gov Kuroda: Reiterates BoJ is buying ETFs to reduce risk premiums; BoJ is unlikely to hit price target by FY2020
• (JP) Japan Finance Min Aso: Various research conducted on digital currency, but must think of effects from digital currency
• 7203.JP Reports Jan Global Production 759.8K units, +3.2% y/y

Korea

• Kospi opens +0.2%
• (KR) South Korea Mar Business Manufacturing Survey: 76 v 65 prior; Non-Manufacturing Survey: 75 v 70 prior
• (KR) South Korea govt to invest KRW135.1B in developing technologies that can be applied to both military and civilian sectors - Yonhap
• (KR) IMF to hold 2019 annual review with South Korea between Feb 27-March 12th
• 005935.KR Samsung Display says it sold 7M curved monitor panels in 2018, aims to increase sales to 10M units in 2019 (+30%)
• (KR) South Korea Jan Department Store Sales y/y: 7.6% v -0.7% prior; Discount Store Sales y/y: 6.3% v -3.6% prior
• (KR) South Korea Q4 Short Term External Debt: $126.6B v $127.7B prior

China/Hong Kong

• Hang Seng opens +0.2%; Shanghai Composite opens -0.1%
• (CN) China State-owned Assets Supervision and Administration Commission (SASAC) official: Increased efforts to clear the overdue debts of centrally administered State-owned enterprises (SOEs) to private companies – Xinhua
• (HK) Hong Kong Q4 GDP Q/Q: -0.3% v +0.1% prior; Y/Y: 1.3% v 2.9% prior;Overall 2018 GDP Y/Y: 3.0% v 3.8% prior
• (HK) Hong Kong Financial Sec Chan: domestic economy being impacted by external factors, to support economy with measures; planning to use HK$150B in new resources to support economy - 2019/20 budget address
• (CN) Analysts expect China and US to announce trade agreement soon - China Daily
• (CN) Construction of China first nuclear power plant this year is scheduled to start in Zhangzhou, Fujian province June 30th - China Daily
• (CN) China PBoC sets Yuan Reference Rate: 6.6857 v 6.6952 prior
• (CN) China PBoC Open Market Operation (OMO): Injects CNY60B in 7-day reverse repos v CNY120B injected in 7-day reverse repos prior; Net: CNY40B injected v CNY120B injection prior
• (CN) China MoF sells 1-yr and 10-yr bonds: Sells 1-yr bonds at 2.3249% v 2.31% prior; bid to cover 1.82x v 3.18x prior; Sells 10-yr bonds at 3.1232% v 3.0328% prior, bid to cover 2.30x v 3.13x prior
• 388.HK Reports FY18 (HK$) Net 9.3B v 7.40B y/y, EBITDA 11.8B v 9.6B y/y; Rev 15.9B v 13.2B y/y

Australia/New Zealand

• ASX 200 opened +0.1%
• (AU) AUSTRALIA Q4 CONSTRUCTION WORK DONE Q/Q: -3.1% V 0.5%E
• (AU) NAB said weaker than expected Q4 construction work done data suggests downside risk to its estimates for Q4 GDP- US financial press
• RHL.AU To be acquired by Nutrien at A$4.40/share in cash in a A$615M deal; to pay special dividend of A$0.90
• (NZ) New Zealand Jan Trade Balance (NZD): -0.9B v -0.3Be; Exports: 4.4B v 4.8Be; Imports: 5.3B v 5.0Be; Trade Balance (12-month YTD): -6.4B v -5.5Be
• OZL.AU Reports FY18 (A$) Net 228.3M v 227Me; EBITDA 540.4M v 530Me; Rev 1.12B v 1.1Be
• MQG.AU Prices upsized A$750M (prior A$500M) of Capital Notes 4 at 4.15% margin v 4.15-4.35% indicated
• RWC.AU Confirms chairman Jonathan Munz to retire, remaining 10% stake held by family sold for A$367M
• (AU) Australia sells A$500M v A$500M indicated in 3.25% April 2029 bonds, avg yield 2.0855%, bid to cover 4.82x

Other Asia

• (IN) India said to again delay higher tariffs on certain US imports - India Press
• (SG) Singapore Central Bank (MAS) Gov Menon: Singapore monetary policy remains appropriate, but what Singapore does in April is a 'totally different matter'

North America

• (US) Weekly API Oil Inventories: Crude: -4.2M v +1.3M prior
• (US) US to probe fabricated structural steel imports from China, Canada and Mexico
• (US) According to American Chamber of Commerce in China, most US firms with operations in China continue to see revenue in China grow - China Daily
• (KR) US President Trump comments ahead of Feb 27-28th Vietnam summit with North Korea Leader: North Korea could be like Vietnam if it denuclearizes
• (CA) Canada warns it may not ratify USMCA until US ends steel and aluminum tariffs - Canada press
• BA Confirms Vietnam's Bamboo Airway to buy 10 787-9 Dreamliners worth $2.9B and in talks to buy an additional 25 737s

Europe

• (UK) Feb BRC Shop Price Index y/y: 0.7% v 0.3%e
• (UK) Govt No Deal impact analysis: despite mitigating steps taken, there are areas where impact on trade, businesses and individuals would be significant
• (UK) Rees-Mogg won't insist on getting rid of the Ireland backstop in Brexit - FT

Levels as of 12:50ET

• Hang Seng +0.7%; Shanghai Composite +0.7%; Kospi +0.5%; Nikkei225 +0.5%; ASX 200 +0.4%
• Equity Futures: S&P500 +0.0%; Nasdaq100 +0.1%, Dax +0.2%; FTSE100 +0.2%
• EUR 1.1374-1.1400; JPY 110.52-110.63 ; AUD 0.7175-0.7196; NZD 0.6884-0.6902
• Commodity Futures: Gold +0.1% at $1,329/oz; Crude Oil +1.0% at $56.03/brl; Copper -0.1% at $2.95/lb