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Market movers today

The main event this week is set to be the UK's triggering of Article 50 on Wednesday. The first part of the negotiations will be centred on the ‘divorce bill' for the UK. The EU has made it clear that substantial progress on this issue will have been delivered before starting negotiations on a new trade deal.

On the date front today, in the euro area we are due to get the February figures for loan growth and M3 money supply growth. Loan growth increased for three consecutive months, from 1.8% yearly growth in October 2016 to 2.2% in January 2017. We estimate it increased further to 2.4% in February.

German Ifo expectations are also due to be released Today. Ifo expectations saw a fall in January to 103.2 from 105.5 in December 2016, but increased to 104.0 again in February. We believe it will have increased a bit further to 104.3 in March. Other survey indicators still indicate optimism in the business economy but German consumer confidence has started to trend lower and in coming months, we expect the same correction in the strong business sentiment seen recently.

German retail sales for February are also due for release. In January, we saw a monthly decline of 1.0% but we estimate a bounce back in February to 0.6%, as consumer confidence remains at a high level and low unemployment supports consumption. Note also that German unemployment figures are scheduled for release on Friday.

We also have two speeches from ECB executive board members. Peter Praet is set to speak on Monday, with Benoit Coeuré due to speak on Friday. The speeches are of special interest to market participants, as speculation about whether the ECB could hike rates before the termination of the QE programme has started to be priced in.

Selected market news

The dollar and US equity futures are this morning building on Friday's declines and gold is climbing further with bonds. This move comes after the failure of the US Congress on Friday night to pass the bill to replace Obamacare. As a result, the market is increasingly questioning whether the Trump administration will be able to pass any significant tax reforms and infrastructure bill, which is far more important for the economy than Obamacare. In our view, changes to US economic policy are likely to come later and be smaller than previously expected due to the chaos within the Republican Party. Asian equity markets are falling in line with US markets this morning. Emerging market currencies are on the other hand gaining against the USD, as a delay to expansionary fiscal policy in the US reduces the risk of more frequent Fed hikes than currently priced in by the markets.

In Europe, the EU leaders (excluding the UK government) showed unity in Rome, where they met to celebrate the 60th anniversary for the Rome Treaty this weekend. Prior to the meeting, there had been some fear that certain member states, such as Poland and Greece, would hijack the meeting to show their frustration against current EU policies, but this did not happen. At the meeting, German chancellor Angela Merkel said that the EU could move forward at different speeds.

Daily Pivots: (S1) 0.8622; (P) 0.8642; (R1) 0.8674; More...

Intraday bias in EUR/GBP remains neutral for the moment. With 0.8699 minor resistance intact, deeper decline is mildly in favor. Below 0.8604 will target 61.8% of 0.8402 to 0.8786 at 0.8549 and possibly below. In that case, we'll look for support above to 0.8402 to bring another rebound before completing that correction from 0.8303. On the upside, above 0.8699 will turn bias back to the upside for 0.8786. Break will target 61.8% retracement of 0.9304 to 0.8303 at 0.8922 to finish the pattern from 0.8303. Overall, price actions from 0.8303 are forming a corrective pattern, as the second leg of the correction from 0.9304.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support from 0.8116 cluster support (50% retracement of 0.6935 to 0.9304 at 0.8120) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Daily Pivots: (S1) 1.4101; (P) 1.4154; (R1) 1.4211; More...

Initial bias in EUR/AUD remains on the upside for the moment. Further rally should be seen to 100% projection of 1.3624 to 1.4183 from 1.3872 at 1.4431 next. Decisive break there will indicate upside acceleration and target 1.4721 key resistance. On the downside, below 1.4051 minor support will turn focus back to 1.3872 support instead.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. Such correction could be completed after testing 1.3671 support. Break of 1.4721 cluster resistance (38.2% retracement of 1.6587 to 1.3624 at 1.4756) should confirm this case and target 61.8% retracement at 1.5455 and above. Overall, we'd expect the up trend from 1.1602 to resume later. However, sustained break of 1.3671 will invalidate our bullish view and would turn focus back to 1.1602 long term bottom.

Daily Pivots: (S1) 1.0694; (P) 1.0707; (R1) 1.0719; More...

Intraday bias in EUR/CHF remains neutral for the moment. We'd slightly favoring the case of trend reversal on bullish convergence condition in daily MACD. And, further rise is mildly in favor as long as 1.0683 minor support holds. Above 1.0761 minor resistance will turn bias to the upside for 1.0823 resistance first. Break will re-affirm the case of trend reversal and target 1.0897 resistance next. However, firm break of 1.0683 minor support will turn bias to the downside for 1.0620 key support level again.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Decisive break of 1.0897 resistance should confirm that it's completed. And in that case, larger up trend is resuming for another high above 1.1198. Meanwhile, sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485.

Global Markets:

• Asian stock markets: Nikkei down 1.40 %, Shanghai Composite gained 0.15 %, Hang Seng declined 0.05 %, ASX lost 0.10 %
• Commodities: Gold at $1256 (+0.65 %), Silver at $17.90 (+0.80 %), WTI Oil at $47.85 (-0.30 %), Brent Oil at $50.85 (-0.15 %)
• Rates: US 10-year yield at 2.37, UK 10-year yield at 1.20, German 10-year yield at 0.40

News & Data:

• Japanese PPI Services (YoY) Feb: 0.8% (est 0.5%; prev 0.5%)
• PBoC Fixes USDCNY Reference Rate At 6.8701 (prev fix 6.8845 prev close 6.8850)
• U.S. equity futures at six-week low after Trump healthcare setback – RTRS
• Stocks stumble on U.S. policy woes; Trumpflation trades suffer – RTRS
• Dollar hits near two-month low after Trump's healthcare debacle – RTRS
• OPEC, non-OPEC to look at extending oil-output cut by six months – RTRS

Markets Update:

The US Dollar came under broad pressure following the failure of Trump’s healthcare reform on Friday. It was not about the bill itself, but rather the fact that this reduces the chances for Trump’s planned tax reform.

USD/JPY was the worst performing currency pair overnight. The pair was relatively stable at the Sydney open and traded around 111. It came under increasing pressure after Tokyo opened for trading, and eventually declined to a low of 110.25. Key support is seen at 110. Should that level break, it is likely USD/JPY will extend losses to at least 108.

EUR/USD took out an important resistance level at 1.0830. Resistance is now seen ahead of the 1.09 level. Should that one be cleared as well, reaching 1.10 should not be too difficult.

Meanwhile, the Australian Dollar remains rather weak. The negative sentiment in stock markets is weighing on the currency, and traders prefer safe havens such as the Yen and Gold. AUD/USD fell to 0.7615 in Asia, and a break sub-0.76 would signal that another test of 0.75 support may follow soon.

Upcoming Events:

• 09:00 GMT – German IFO Business Climate
• 15:30 GMT – US Dallas Fed Manufacturing Index
• 23:00 GMT – RBA Assistant Governor Debelle speaks
• 23:30 GMT – FOMC Member Kaplan speaks

The Week Ahead:

Tuesday, March 28th

• 15:00 GMT – US CB Consumer Confidence
• 15:00 GMT – US Richmond Manufacturing Index
• 15:10 GMT – Bank of Canada Governor Poloz speaks

Wednesday, March 29th

• 15:00 GMT – US Pending Home Sales
• 15:30 GMT – US Crude Oil Inventories

Thursday, March 30th

• 01:00 GMT – Australia HIA New Home Sales
• 11:00 GMT – Euro Zone Consumer Confidence
• 13:00 GMT – German CPI
• 13:30 GMT – US GDP
• 13:30 GMT – US Initial Jobless Claims

Friday, March 31st

• 00:30 GMT – Japanese CPI
• 00:30 GMT – Japanese Household Spending
• 00:50 GMT – Japanese Industrial Production
• 01:00 GMT – Australian ANZ Business Confidence
• 02:00 GMT – Chinese Manufacturing PMI
• 02:00 GMT – Chinese Non-Manufacturing PMI
• 07:00 GMT – German Retail Sales
• 07:45 GMT – French CPI
• 09:00 GMT – German Unemployment Rate
• 09:30 GMT – UK GDP
• 10:00 GMT – Euro Zone CPI
• 10:00 GMT – Italian CPI
• 13:30 GMT – US Core PCE Price Index
• 13:30 GMT – US Personal Income
• 13:30 GMT – US Personal Spending
• 13:30 GMT – Canadian GDP
• 15:00 GMT – US Michigan Consumer Sentiment

Daily Pivots: (S1) 0.7603; (P) 0.7622; (R1) 0.7640; More...

Intraday bias in AUD/USD remains mildly on the downside for the moment. With 0.7683 minor resistance intact, deeper decline is in favor to 0.7490 support. Firm break there will confirm completion of rise from 0.7158. In such case, near term outlook will be turned bearish for 0.7158 support next. On the upside, though, above 0.7683 minor resistance will turn bias back to the upside for 0.7748 and above. At this point, we'd continue to expect strong resistance from long term retracement level at 0.7849 to limit upside.

In the bigger picture, we're still treating price actions from 0.6826 low as a correction. And, as long as 38.2% retracement of 0.9504 to 0.6826 at 0.7849 holds, long term down trend from 1.1079 is expected to resume sooner or later. Break of 0.6826 low will target 0.6008 key support level. However, firm break of 0.7849 will indicate that rise from 0.6826 is developing into a medium term rebound, rather than a sideway pattern. In such case, stronger rise should be seen to 55 month EMA (now at 0.8169) and above.

Daily Pivots: (S1) 1.3349; (P) 1.3367; (R1) 1.3396; More....

Intraday bias in USD/CAD remains neutral for the moment as it's bounded in range of 1.3263/3408. On the upside, above 1.3408 will turn bias to the upside for 1.3534. Break will target 1.3598 high next. On the downside, below 1.3263 will extend the fall from 1.3534. Still, fall from 1.3534 is seen as a correction only. Hence, in that case, we'd expect strong support from 1.3211 cluster level (61.8% retracement of 1.3008 to 1.3534 at 1.3209) to contain downside and bring rebound. Overall, rise from 1.2968 is expected to resume later to extend through the whole medium term rise from 1.2460 through 1.3598.

In the bigger picture, price actions from 1.4689 medium term top are seen as a correction pattern. The first leg has completed at 1.2460. The second leg is likely still in progress and could target 61.8% retracement of 1.4689 to 1.2460 at 1.3838. We'd look for reversal signal there to start the third leg. Break of 1.2968 wold at least bring at retest of 1.2460 low. However, sustained trading above 1.3838 would pave the way to retest 1.4689 high.

Key Points:

• The AUD could go either way this week depending on the fundamentals.
• EMA bias remains bullish which could see a near-term recovery.
• However, MACD crossover is hinting at further downside

The AUDUSD has reached a bit of an impasse as a result of last week's tumble which now raises the question of what is next on the agenda. Consequently, it may be worth taking a look at what brought the pair to where it is now and what might be fuelling either the potential recovery or extension of the recent downtrend.

Starting with last week's performance, the Aussie Dollar was initially looking fairly bullish last week as it surged higher in response to the political risks sparked by the ongoing ‘Trumpcare' fiasco. However, this buying pressure was short-lived as it brought the pair into conflict with the descending trend line around the 0.7732 handle. Importantly, this proved to be a reversal point that slapped the pair sharply lower in short order. However, these losses continued to be realised as the fundamental bias began to favour the USD. Notably, the pair had another big slide in response to an uptick in the US New Home Sales figure to 592K m/m.

On the technical front, as mentioned, the AUD is now at a bit of a crossroads which could see either a mild recovery or further losses this week. Which of the two outcomes occurs is largely predicated on whether or not the pair breaks through the 50.0% Fibonacci level around the 0.7609 mark. If we do see the level broken, the MACD signal line crossover will complete which could mean losses extend back to the 0.7562 mark before the 100 day EMA provides some support. However, if the retracement holds, the generally bullish EMA bias could see the AUD move to recover some of last week's losses.

As for what lies ahead on the news front, the first half of the week will largely focus on the usual slew of US data and some scheduled comments from a number of Fed members. Conversely, the second half of the week will be slightly more Australian news focused as the HIA New Home Sales and Job Vacancies are due out on Thursday. Although, it is worth mentioning that the US Final GDP figure is also due on Thursday which could either compound or mitigate the effect of the two Australian results, dependent on whether or not the 2.0% q/q uptick is realised.

Ultimately, it's worth keeping an eye on this pair as it has the potential to please both the bulls and the bears out there. However, remember to pay close attention to both the fundamentals and that 50.0% Fibonacci retracement as these will be key in catching either the rebound or the fresh breakout and subsequent downside risk.

Key Points:

• USDJPY flirting with a 1.10 handle breakdown.
• Net positioning towards shorts.
• Watch for a breakdown in the coming days.

The past week has been highly negative for the USDJPY as s sentiment swing, against the U.S. Dollar, has been in progress following some upset expectations around potential Fed rate hikes. Subsequently, the pair has plumbed new depths as a determined depreciation has sent the pair reeling towards the 1.10 handle. Subsequently, we review the major events of last week with and discuss some of the key points that are likely to impact the pair's valuations in the week ahead.

The USDJPY slid sharply lower throughout most of last week as the pair was beset by a broadly negative greenback sentiment swing. The change in sentiment is largely due to shifting goal posts around future FOMC rate hikes with little in the way of hawkish rhetoric from the Fed last week. Subsequently, net greenback short positions are increasing which led to significant selling of the USDJPY late into the week's session. This saw the pair take out some key support zones and enter the close sharply under pressure around the 110.61 mark.

The week ahead is likely to be critical for the pair with the key 110.00 support level looming and the bears waiting in the wings. The market's key focus for the coming week is likely to be the Japanese CPI and U.S. Jobless Claims. In particular, the U.S. Unemployment Claims figures are likely to be closely watched by traders as they grapple with the Fed's potential direction on rate hikes in the coming months. Most economists have the result coming in around the 245k mark but a miss could see some significant selling pressure on the pair and put the 110.00 handle in focus.

From a technical perspective, the pair's recent collapse seems to suggest that a corrective phase is in progress and is yet to complete. The pair has plumbed some key lows but we are yet to see some sharp follow through selling. Regardless, the bears are firmly in control and the coming week is likely to open with plenty of short selling. Support is currently in place for the pair at 110.40, 109.08, and 107.62. Resistance exists on the upside at 111.87, 113.28, and 114.40.

Ultimately, it would appear that the bears aren't going anywhere soon as we move into the Asian trading session. This is especially the case given the both technical and fundamental factors suggest that the decline is not yet over for the pair. Subsequently, keep a close watch in the coming days as a breach of the key 110.00 handle could signal a recommencement of the sharp falls.

Daily Pivots: (S1) 1.0764; (P) 1.0791 (R1) 1.0823; More.....

EUR/USD's rise from 1.0339 resumed by taking out 1.0828 resistance and reaches as high as 1.0849 so far. Intraday bias is back on the upside. Next target will be 100% projection of 1.0339 to 1.0828 from 1.0494 at 1.0983. However, as rise from 1.0339 is seen as a corrective move. We'd expect upside to be limited by 1.0983 to complete the correction. On the downside, break of 1.0760 minor support will turn bias to the downside for 1.0494 support first.

In the bigger picture, as long as 1.1298 key resistance holds, whole down trend from 1.6039 (2008 high) is still expected to continue. Break of 1.0339 low will send EUR/USD through parity to 61.8% projection of 1.3993 to 1.0461 from 1.1298 at 0.9115. However, considering bullish convergence condition in weekly MACD, break of 1.1298 will indicate term reversal. this would also be supported by sustained trading above 55 week EMA.