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European equity markets are expected to open a little lower on Friday, following the cue from the US and Asia overnight where markets ended in the red following a phenomenal run over the last month, particularly across the pond.

While the weekend is nearing and we may be seeing some profits being taken off the table, the week is far from over with four Fed officials – including the Chair and vice Chair – all speaking throughout the day prior to the blackout period. We'll also get a scattering of services PMI data from across Europe and the US as the day goes on which should ensure the end of the week is anything but a dull affair.

Investors have spent the last week in a frenzy trying to position themselves for a possible rate hike in March, having only a couple of weeks ago written one off almost altogether. We've now almost swung entirely the other way, with the probability above 75% from below 20% previously.

With Janet Yellen, Stanley Fischer, Charles Evans and Jerome Powell all making appearances today, there will be ample opportunity for officials to make any final tweaks to expectations before blackout period begins tomorrow, at which point we won't hear from any Fed policy makers again until 15 March.

Given the intention was clearly to ensure the markets see this meeting as being live, I think the message today will be broadly consistent with what we've heard over the last week. The risk is that the Fed raises expectations too high for March and doesn't deliver which will once again have people questioning its credibility. Whether markets fully buy into March could hang on the subtlest of hints today from Yellen, for example whether she talks about the prospect of a hike in March as opposed to upcoming meetings. The latter would give the Fed some leeway heading into the meeting.

China Services PMI prints 4-month low

Asia Mid-Session Market Update: China Services PMI prints 4-month low; Hong Kong PMI contraction deepens

US Session Highlights

(RU) Russia Energy Min Novak: too soon to say if a global deal on oil output cuts will be extended

(US) INITIAL JOBLESS CLAIMS: 223K V 245KE (lowest since Mar 1973); CONTINUING CLAIMS: 2.07M V 2.06ME

(US) CNBC's Harwood: Treasury Sec Mnuchin said to have told Senate Banking Republicans that he opposes border adjustment tax

(US) Feb ISM New York: 51.3 v 57.7 prior

(US) WEEKLY EIA NATURAL GAS INVENTORIES: +7 BCF VS. -3 TO -5 BCF EXPECTED RANGE

(US) Fed's Powell (moderate, voter): Rate hike in March is on table for discussion

US markets on close: Dow -0.5%, S&P500 -0.6%, Nasdaq -0.7%

Best Sector in S&P500: Utilities

Worst Sector in S&P500: Financials

Biggest gainers: MNST +12.8%, BBY +6.4%, URBN +5.7%, GPS +3.3%, AES +2.5%

Biggest losers: FCX -4.9%, KR -4.3%, CAT -4.3%, ENDP -4.1%, MUR -3.9%

At the close: VIX 11.8 (-0.7pts); Treasuries: 2-yr 1.31% (+2bps), 10-yr 2.49% (+3bp), 30-yr 3.08% (+1bps)

US movers afterhours

HABT: Reports Q4 $0.07 v $0.04e, R$73.9M v $73.3Me; Guides initial FY17 R$338-342M v $338Me; SSS +2%; Capex $44-47M; +10.9% afterhours

GWRE: Reports Q2 $0.28 v $0.14e, R$115.6M v $110Me; Guides Q3 -$0.05 to -$0.02 v +$0.09e, R$102-106M v $111Me; +2.4% afterhours

MRVL: Reports Q4 $0.22 v $0.19e, R$571M v $571Me; +2.0% afterhours

ADSK: Reports Q4 -$0.28 v -$0.33e, R$479M v $473Me; -1.4% afterhours

COST: Reports Q2 $1.17 v $1.35e, R$29.1B v $30.0Be; To increase membership fees by $5; -4.3% afterhours

WING: Reports Q4 $0.15 v $0.14e, R$24.8M v $24.9Me; -6.8% afterhours

AOBC: Reports Q3 $0.66 v $0.54e, R$233.5M v $234Me; Guides Q4 adj EPS $0.32-0.42 v $0.56e, R$200-220M v $242Me; -7.0% afterhours

BBG: Reports Q4 -$0.18 adj v -$0.12e, R$51.6M v $63.6Me- Guides initial FY17 production 6.0-6.5 MMboe; Guides initial FY17 capex $255-285M; -10.3% afterhours

NTNX: Reports Q2 -$0.28 v -$0.35e, R$182.2M v $179Me; Guides Q3 -$0.48 to -$0.45 v -$0.34e, R$180-190M v $187Me, gross margin 57-58%; -13.8% afterhours

KPTI: Interim Analysis of Phase 2 SOPRA study evaluating Selinexor in Relapsed/Refractory Acute Myeloid Leukemia determines SOPRA will not reach statistical significance for overall survival (OS); -15.1% afterhours

SCYX: Delays initiation of new clinical studies using the IV formulation of SCY-078 at FDA’s request; Ongoing and future clinical development using the oral formulation of SCY-078 are unaffected; -26.6% afterhours

Politics

(US) President Trump: has 'total confidence' in Attorney General Sessions - press

(US) Attorney General Sessions: To recuse himself from any investigations related to the Trump campaign

(US) AG Sessions: Talked with US ambassador about a number of issues, including Ukraine; Did not discuss Trump campaign - Fox interview

Asia Key economic data

(CN) CHINA FEB CAIXIN PMI SERVICES: 52.6 V 53.1 PRIOR; 4-month low

(JP) JAPAN FEB SERVICES PMI: 51.3 V 51.9 PRIOR; COMPOSITE PMI: 52.2 v 52.3 PRIOR

(JP) JAPAN FEB TOKYO CPI Y/Y: -0.3% V -0.1%E; CPI EX-FRESH FOOD Y/Y: -0.3% V -0.2%E

(JP) JAPAN JAN NATIONAL CPI Y/Y: 0.4% V 0.4%E; CPI EX FRESH FOOD (CORE) Y/Y: 0.1% V 0.0%E

(JP) JAPAN JAN JOBLESS RATE: 3.0% V 3.0%E

(JP) JAPAN JAN OVERALL HOUSEHOLD SPENDING Y/Y: -1.2% V -0.4%E

(HK) HONG KONG FEB COMPOSITE PMI:49.6 V 49.9 PRIOR; 2nd month of contraction

(SG) SINGAPORE FEB PMI COMPOSITE: 51.4 V 51.6 PRIOR

(KR) SOUTH KOREA FEB CPI M/M: 0.3% V 0.1%E; Y/Y: 1.9% V 1.8%E

(KR) SOUTH KOREA FEB CURRENT ACCOUNT BALANCE: $5.3B V $7.9B PRIOR; GOODS BALANCE: $7.8B V $9.4B PRIOR

Asia Session Notable Observations, Speakers and Press

Asia indices are down heading into the weekend, tracking far more restrained sentiment on Wall St after an outsized rally in the wake of Pres Trump's Congressional address. Concerns over valuations, building expectations of March Fed hike, and political controversy in the White House are being attributed for the decline, as Financials and Materials sold off the most heavily while Utilities rallied. Regionally, ASX200 was pulled lower by mining shares, with Dalian Iron Ore down notably and HSBC warning of potential "massive fall" in the metal. In FX space, USD/JPY and NZD/USD saw more pronounced declines on risk aversion, falling 40 and 35 pips from session highs respectively.

Japan CPI data were mixed, as headline nationwide print ticked up higher while forward looking Tokyo-region dipped deeper in the red. In its regular QE operations, BOJ also pulled back on the purchases of long bonds in an effort to steepen the curve.

In China, Feb Caixin Services PMI slowed to a 4-month low, even as overall Composite improved and composite Employment component rose for the first time in nearly 2 years. Economists noted a rise in new orders along with a sharp rise in input costs in Feb, while the Outlook anticipates growth momentum in Q1 before some slowing in Q2. Hong Kong PMI saw its 2nd straight month of contraction amid receding inflation, biggest contraction in new orders in a year, and rising inventories. Note that China's annual National People’s Congress (NPC) begins on Sunday with anticipated announcement of 2017 economic targets.

China

(CN) Hangzhou City to further restrict housing purchase to curb property market - Xinhua

(CN) China govt urged to offer a preferential rate to small home buyers - Chinese press

(CN) PwC annual CEO survey: 33% of mainland China execs are "very confident" about their 12-month outlook for op income v 25% y/y - Chinese press

Japan

(JP) Japan Fin Min Aso: to determine contents of US-Japan economic dialogue

(JP) Japan Defense Ministry scrambled its fighter jets after about 13 China airplanes were seen flying through Miyako Strait between Japan's southern islands of Okinawa and Miyako - Nikkei

Australia

HSBC: Iron ore prices are set for a "massive fall" - SMH

(AU) OECD: Australia housing market could "develop into a rout" - Australian press

Asian Equity Indices/Futures (00:00ET)

Nikkei -0.7%, Hang Seng -0.7%, Shanghai Composite -0.4%, ASX200 -0.8%, Kospi -1.3%

Equity Futures: S&P500 -0.3%; Nasdaq -0.3%; Dax -0.3%; FTSE100 -0.3%

FX ranges/Commodities/Fixed Income (00:00ET)

EUR 1.0500-1.0525; JPY 114.05-114.45; AUD 0.7545-0.7575; NZD 0.7030-0.7065

Apr Gold +0.1% at $1,234/oz; Apr Crude Oil +0.1% at $52.67/brl; May Copper -0.1% at $2.68/lb

GLD SPDR Gold Trust ETF daily holdings rise 1.8 tonnes to 845.3 tonnes; 2nd straight increase

(CN) PBOC SETS YUAN MID POINT AT 6.8896 V 6.8809 PRIOR; 3rd straight weaker setting; weakest Yuan setting since Feb 13th

(CN) PBOC to inject combined CNY30B v CNY30B prior in 7-day, 14-day and 28-day reverse repos

(AU) Australia MoF (AOFM) sells A$800M in 1.75% 2020 Bonds; avg yield: 2.1076%; bid-to-cover: 5.16x

(JP) BOJ To buy ¥100B in JGBs with maturity over 25-yr (down from ¥120B)

Asia equities/Notables/movers by sector

Consumer discretionary: 9983.JP Fast Retailing +2.0% (Feb Uniqlo SSS); 2685.JP Adastria Holdings Co -1.8% (Feb SSS)

Financials: 337.HK Greenland Hong Kong +3.4% (profit alert); BOQ.AU Bank of Queensland -3.1% (JPMorgan cuts rating); AFG.AU Allco Finance -2.0% (CEO steps down); MPL.AU Medibank -3.1% (Macquarie cuts rating)

Industrials: 6104.JP Toshiba Machine Co +4.9%; 1802.JP Obayashi Corp -4.3% (Credit Suisse cuts rating)

Technology: 300104.CN Leshi Internet Info & Tech Co Beijing -4.9% (easing short-term funding pressure, to exit India); 002465.CN Guangzhou Haige Communications Group Inc Co +2.9% (approval for new shares)

Materials: WGX.AU Westgold Resources -1.2% (Bell Potter cuts rating); FMG.AU Fortescue Metals Group -5.4% (iron ore price may face massive fall)

Energy: RIL.IN Reliance Industries +2.4% (Ruffer raises stake)

Healthcare: 9627.JP Ain Pharmacie -1.6% (9-month result); 4694.JP BML -3.0%, 6849.JPNihon Kohden Corp -1.7% (Jefferies cuts rating)

Telecom: NTC.AU Netcomm Wireless -6.0% (Canaccord Genuity Cuts rating)

Weekly

• Last Candlesticks pattern: Bullish engulfing
• Time of formation: 02 May 2016
• Trend bias: Up

Daily

• Last Candlesticks pattern: Hammer
• Time of formation: 19 Oct 2016
• Trend bias: Up

USD/CAD – 1.3380

The greenback found decent demand at 1.3056 and staged a much stronger-than-expected rebound, dampening our bearishness and suggesting the decline from 1.3599 has ended at 1.2969 bark in January, hence consolidation with mild upside bias is seen for further gain to 1.3450 and then towards 1.3500, however, as broad outlook remains consolidative, reckon upside would be limited to 1.3540-50 and price should falter well below resistance at 1.3599, bring further choppy trading within recent established broad range.

On the downside, whilst pullback to 1.3310-20 cannot be ruled out, reckon the lower Kumo (now at 1.3256) would limit downside and price should stay above the Kijun-Sen (now at 1.3186), bring another rise later. A daily close below the Kijun-Sen would suggest top is possibly formed, bring weakness to 1.3150-60, however, downside should be limited to 1.3100 and said support at 1.3056 should remain intact. Only a drop below 1.3056 support would revive bearishness and signal the rebound from 1.2969 has ended, then test of 1.3009 support would be seen first.

Recommendation: Stand aside for this week.

On the weekly chart, this week's rally looks set to form a long white candlestick, suggesting the fall from 1.3599 has ended at 1.2969 earlier, hence consolidation with mild upside bias is seen for further gain to 1.3400, however, said resistance at 1.3599 should hold from here, bring further consolidation. Only a break of said resistance at 1.3599 would shift risk back to upside and extend the erratic rise from 1.2461 (2016 low) to 1.3700 and later towards 1.3835-40 (61.8% Fibonacci retracement of 1.4690-1.2461) which is likely to cap upside.

On the downside, although pullback to 1.3300-10 cannot be ruled out, reckon downside would be limited to 1.3250 and bring another rebound later. A drop below the Kijun-Sen (now at 1.3211) would risk weakness to 1.3150 and possibly test of this week's low at 1.3083 but break of indicated support at 1.3056 support is needed to revive bearishness and signal the rebound from 1.2969 has ended, then test of 1.3009 support would follow, break there would signal the fall from 1.3599 has resumed for retest of 1.2969, a break of this support would extend such decline to 1.2900 but reckon support at 1.2822 would limit downside and key support at 1.2763 should hold on first testing. Looking ahead, only a drop below 1.2763 would signal the rebound from 1.2461 has ended and bring further fall to 1.2654 support first.

Global Markets:

• Asian stock markets: Nikkei down 0.60 %, Shanghai Composite lost 0.40 %, Hang Seng declined 0.65 %, ASX 200 lost 0.80 %
• Commodities: Gold at $1233 (+0.05 %), Silver at $17.78 (+0.15 %), WTI Oil at $52.70 (+0.10 %), Brent Oil at $55.15 (+0.15 %)
• Rates: US 10-year yield at 2.48, UK 10-year yield at 1.21, German 10-year yield at 0.32

News & Data:

• Japan CPI Jan (YoY): 0.4%
• Japan Services PMI Feb: 51.3 (Prior 51.9)
• Japan Composite PMI Feb: 52.2 (Prior 52.3)
• Japan Household Spending Jan (YoY): -1.2% (Prior -0.30%)
• Japan Household Confidence Feb: 43.1 (Prior 43.2)
• Japan Unemployment Rate Jan: 3.0% (Prior 3.10%)
• Japan Jobs/Applications Ratio Jan: 1.44 (Prior 1.43)
• Australia AIG Services Index Feb: 49.0 (Prior 54.5)
• PBoC Fixes USDCNY Reference Rate At 6.8896 (prev fix 6.8809)

Markets Update:

The US Dollar is showing renewed strength, as the market is clearly expecting a rate hike by the Federal Reserve this month. Several major pairs are approaching key support level. EUR/USD is nearing 1.05 again, while GBP/USD briefly broke below 1.2250 yesterday. A clear break sub-1.2250 would then signal that the downtrend could extend to 1.20. Meanwhile, USD/JPY struggled at 114.50 resistance and reversed. However, demand remains solid and decent buying interest can be expected at 113.80 and again 113.50.

After a period of low volatility, the Australian Dollar is finally moving again. The broad Dollar strength put the commodity currencies under pressure. AUD/USD broke below 0.76 yesterday and momentum selling brought it to a low of 0.7540. Important support is now seen around 0.7510/20. Should it break below that area, a test of 0.73 seems likely.

Upcoming Events:

• 07:00 GMT – German Retail Sales
• 08:45 GMT – Italian Services PMI
• 08:50 GMT – French Services PMI
• 08:55 GMT – German Services PMI
• 09:00 GMT – Euro Zone Services PMI
• 09:00 GMT – Italian GDP
• 09:30 GMT – UK Services PMI
• 10:00 GMT – Euro Zone Retail Sales
• 14:45 GMT – US Services PMI
• 15:00 GMT – US ISM Non-Manufacturing PMI
• 18:00 GMT – Fed Chair Yellen speaks

Key Points:

• Price action moving in a wave pattern.
• RSI Oscillator close to overbought levels.
• Watch for a breakdown towards the lower channel constrain in the coming days.

The USDCHF has had a fairly strong past few days as the currency pair has reacted to the rampant bullishness of the U.S. Dollar. Largely buoyed by a stronger than expected U.S. Unemployment Claims result of 223k, and announcements of stimulative fiscal policy, price action has climbed steadily higher. In fact, the last few days has seen the pair form a strongly bullish channel and seen the pair move higher in a wave formation. However, despite the near term bullishness, we could be about to see a pullback as price action looks ready to take a wave lower in the coming days.

Taking a look at the various technical indicators also highlights the current conundrum that the pair faces. Currently, price action is nearing the top of the bullish channel whilst the RSI Indicator is running out of steam and is relatively close to overbought territory. In fact, the USDCHF has been doing its best to remain below the near term resistance level at 1.0140 which suggests that the downside move is the most likely scenario in the coming days.

However, there are also some fundamental events that could forestall a short term pullback and change the current playing field. In particular, Janet Yellen is set to speak late on Friday (1800 GMT) and is highly likely to espouse a hawkish view on rates. Given the veritable PR campaign from the central bank of late, it's highly likely that the Fed Chair will want to get out in front of the market and start shaping expectations of a near term rate hike.

Ultimately, the pair has some significant technical factors that are suggesting price action will decline, in a wave formation, back towards the lower channel constraint. Subsequently, watch for the scenario where price action breaks below support at 1.0102 to signal a sharp move lower, towards the bottom of the channel. In extension, we could witness the invalidation of the lower constrain, however, the most likely scenario is a rebound from support. Subsequently, the short push is likely to be only short term in nature, before the pair returns to its bullish predilection.

Key Points:

• Oil prices should recover despite US inventories build.
• Ascending trend line should remain intact.
• EMA’s retain a bullish bias

Oil is setting up for a technical reversal in the coming sessions which might come as somewhat of a surprise given the recent plunge in the spot price to $52.52 and decline in futures of around 2.3%. Specifically, despite the US having a record inventories uptick to 520.2 million barrels, the overarching consolidation pattern should remain largely intact which means upside potential could be back on the menu.

Notably, even with the substantial selling pressure following the US data release, downsides were capped at around the 52.35 handle. This comes predominately as result of that ascending trend line which has proven to be a rather reliable source of support since OPEC began its production freeze. However, the intersection of the 61.8% Fibonacci retracement with this trend line also reinforced support to a significant degree.

As a result of this impasse, a reversal seems to be the logical next step for oil prices. Indeed, a modest recovery would be broadly in line with the daily moving average bias which remains incredibly bullish despite the near constant threat that US oil poses to OPEC’s plan to lessen the global supply glut. What’s more, a move to the upside would help to alleviate the Stochastics which are trending into oversold territory as we speak.

However, it’s worth mentioning that any rallies are almost certainly going to remain beholden to the upside constraint of the triangle formation. More precisely, the interplay of the simultaneous optimism that OPEC can buoy crude prices and the pessimism that the US and Canada can offset much of the falling output also provides a fundamental explanation for why we can expect to see price action consolidate and narrow moving forward.

Ultimately, as both technicals and fundamentals are in line, we should see a nice technical reversal as the commodity seeks to return to its developing central tendency. However, also keep an eye on any reactionary moves from OPEC and Russia who could see this latest slip as evidence that the freeze is failing as this could see the agreement begin to unravel.

Daily Pivots: (S1) 1.3773; (P) 1.3833; (R1) 1.3935; More...

The break of 1.3900 resistance suggests that a short term bottom is in place at 1.3642 on bullish convergence condition in 4 hour MACD. Also, this is taken as an early sign of trend reversal as EUR/AUD defended 1.3671 key support level. Intraday bias is turned back to the upside for 1.4289 resistance next.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a corrective pattern. We'd expect strong support from 1.3671 key level to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4721 resistance will indicate completion of such correction and turn outlook bullish for retesting 1.6587 high. 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) 139.80; (P) 140.27; (R1) 140.81; More...

GBP/JPY is still bounded in range of 138.53/142.79 and intraday bias remains neutral for the moment. Overall, price actions from 148.42 are seen as a corrective pattern. Below 138.53 will bring deeper fall, possibly through 136.44 support. But strong support could be seen at 50% retracement of 122.36 to 148.42 at 135.39 to bring rebound. Above 142.79 will turn bias back to the upside for 144.77 and above.

In the bigger picture, price actions from 122.36 medium term bottom are still seen as a corrective pattern. Main focus is on 38.2% retracement of 195.86 to 122.36 at 150.42. Rejection from there will turn the cross into medium term sideway pattern with a test on 122.36 low next. Though, sustained break of 150.42 will extend the rebound towards 61.8% retracement at 167.78.

Daily Pivots: (S1) 0.8544; (P) 0.8567; (R1) 0.8587; More...

Intraday bias in EUR/GBP remains neutral as it's staying in range of 0.8402/8590. With 0.8590 resistance intact, we're holding on to our bearish view. That is, fall from 0.8851 is the third leg of the whole corrective pattern from 0.9304. Below 0.8402 will turn bias to the downside for 0.8303 first. Break will confirm our bearish view and target 0.8116 key cluster support level. However, on the upside, break of 0.8590 resistance will dampen our view and turn bias back to the upside for 0.8851 resistance.

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) 1.0637; (P) 1.0646; (R1) 1.0654; More...

Intraday bias in EUR/CHF remains neutral as it's still bounded in range above 1.0629 temporary low. As long as 1.0706 resistance stays intact, deeper decline is still expected in the cross. Firm break of 1.0620 key support level will extend the larger decline from 1.1198 to 1.0485 fibonacci level. However, break of 1.0706 resistance will indicate short term bottoming and turn bias back to the upside. Further break of 1.0749 resistance will raise the chance of medium reversal.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress. Sustained trading below 38.2% retracement of 0.9771 to 1.1198 at 1.0653 will target 50% retracement at 1.0485. On the upside, break of 1.0897 resistance is needed to confirm completion of such fall. Otherwise, outlook will stay bearish.