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EUR/USD

It was a dull start to the week with the US on holiday's due to the Presidents day, and a light macroeconomic calendar in Asia and the EU. The EUR/USD pair held above the 1.0600 level, but at the same time traded as high as 1.0632, as political concerns undermine the common currency. In the data front, Germany released its January Producer Price index, which resulted up for the month by 0.7%, above an expected 0.2%, while compared to a year earlier, prices at factory levels rose by 2.4%, above previous 1.0% and market's forecast of 1.9%. Preliminary consumer confidence for February in the EU fell by more than expected, with the index down to -6-2 from a previously revised -4.8. Things will get more interesting staring this Tuesday, with the release of European PMIs, and further on Wednesday, with the latest FOMC's Minutes.

From a technical point of view the pair has made little progress over the last 24 hours, maintaining a bearish, stance despite the sharp bounce from 1.0520 from last week. In the 4 hours chart, the price has been unable to advance beyond a bullish 20 SMA, whilst the Momentum indicator heads south below its 100 level and the RSI consolidates around 47, this last reflecting the limited intraday volume. A break below 1.0590 is required to confirm a bearish extension towards the 1.0560 region first, followed later by the mentioned low at 1.0520.

Support levels: 1.0590 1.0565 1.0520

Resistance levels: 1.0650 1.0680 1.0720

USD/JPY

The USD/JPY pair saw little action this Monday, recovering modestly above the 113.00 figure, but unable to extend its recovery further, in spite of advancing equities in Asia and Europe. Japan will release its All Industry Activity index and the Nikkei Manufacturing PMI during the upcoming hours, both expected below previous readings. Still the pair will likely keep on correlating with US Treasury yields rather than trading on macroeconomic data. The modest recovery was contained by a bearish 100 SMA in the 4 hours chart that also shows that the RSI indicator remains flat around 45, whilst the Momentum indicator keeps recovering, but within negative territory, pretty much maintaining the downward potential intact, particularly after the sharp retracement from the 115.00 region. Speculative interest may prefer to wait until next Wednesday, when the FED will release the Minutes of its latest meeting, before taking firmer positions in the USD/JPY pair.

Support levels: 112.45 112.10 111.60

Resistance levels: 113.00 113.40 113.85

GBP/USD

The GBP/USD pair advanced up to 1.2482 during the London morning, and settled around 1.2460, as the House of Lords began debating the Brexit bill. Policymakers are expected to pass it with no amendments, clearing the way to trigger the Art. 50 next March. There were some minor macroeconomic releases in the UK, with a better-than-expected Rightmove house price index, up by 2.0% in January, yet at the same time, the slowest rate of price gains in four years. The CBI orders survey showing that industrial orders for February rose to a two-year high, with the index up to 8 from previous 5 and the expected 3. Despite this short term recovery, the Pound remains vulnerable ahead of the upcoming Brexit, particularly after recently released data indicating higher inflation is beginning to affect the economy. Technically, the 4 hours chart shows that the price is now around a horizontal 20 SMA, which also converges with a flat 200 EMA, this last indicating the absence of clear trend since early February, whilst technical indicators head south after failing to overcome their mid-lines, all of which supports a new leg lower, on renewed selling interest below 1.2430, the immediate support.

Support levels: 1.2430 1.2380 1.2345

Resistance levels: 1.2480 1.2530 1.2565

GOLD

Gold prices consolidate around Friday's closing levels, with spot ending the day at $1,237.40 a troy ounce, confined to a tight range due to a holiday in the US and ahead of the release of US FOMC's Minutes later this week. Also, several FED officials will be on the wires during the next few days in different events, which means that gold traders will be looking for clues on the timing of the next rate hike before moving the metal in a certain way. From a technical point of view, and according to the daily chart, the risk remains towards the upside, as the price held above the 50% retracement of its post-US election slide, and also above a sharply bullish 20 SMA. Technical indicators in the mentioned chart hold in positive territory, with the Momentum heading modestly lower within positive territory, but the RSI steady at 63. Shorter term, and according to the 4 hours chart, the price is a few cents above a bullish 20 SMA, the RSI indicator heads north around 55, but the Momentum indicator keeps diverging, heading south around its 100 level, this last somehow warning that bulls are beginning to pullback.

Support levels: 1,233.90 1,222.50 1,216.60

Resistance levels: 1,244.60 1,255.10 1,261.60

WTI CRUDE

Crude oil prices posted some modest advance at the beginning of the week, underpinned by rising speculation that the OPEC may extend its output cut deal. West Texas Intermediate Crude oil futures advanced up to $54.22 a barrel and closed the day at 53.97, with gains limited by lingering concerns about rising US production. From a technical point of view, the black gold maintains its neutral stance, as in the daily chart, the price has barely advanced above a still flat 20 DMA, currently around 53.40, while technical indicators continue consolidating around their mid-lines with no directional strength. In the 4 hours chart, the commodity is currently trading above all of its moving averages that anyway remain flat and within a tight range, whilst technical indicators continue hovering around their mid-lines with no clear directional strength. Gains beyond the 55.00 level seem unlikely for the upcoming days unless the US reports a sharp drop in stockpiles, and even in that case, a spike above the level could be quickly reversed on profit taking.

Support levels: 53.40 53.00 52.60

Resistance levels: 54.40 55.20 55.70

DJIA

US markets were closed due to a local holiday this Monday, with the DJIA last registered close at 20,624.05. Despite the cautious mood ahead of FED's Minutes and uncertainty surrounding a tax reform, expected to be announced next week, US equities advanced in futures trading, extending up to an all-time high of 20,693 and trading around 20,650 ahead of the Asian opening. From a technical point of view, the daily chart shows that the RSI indicator has resumed its advance around 78, while the benchmark is far above bullish moving averages, maintaining the risk towards the upside. The Momentum indicator in the mentioned time frame has eased within overbought levels, rather reflecting the absence of volume than suggesting an upcoming bearish move. In the 4 hours chart, the 20 SMA maintains its bullish slope below the current level, now around 20,612, while the Momentum indicator is currently bouncing from its mid-line and the RSI consolidates around 68, also favoring further gains, particularly on an advance beyond the mentioned intraday high.

Support levels: 20,612 20,552 20,506

Resistance levels: 20,693 20,750 20,800

FTSE 100

The FTSE 100 closed flat at 7,299.86, weighed by plummeting Unilever, as shares of the packaged- food company sunk after Kraft Heinz dropped its $143 billion offer to combine both companies. Shares, however recovered, ahead of the close, and Unilever closed 5.99% higher. Royal Bank of Scotland lead winners' list, up 6.81%, on news that the bank may not sell its Williams & Glyn business, while Pearson shed 3.89%, the worst performer this Monday. The bullish stance has eased, according to technical readings in the daily chart, as the RSI indicator retreats from overbought levels, now heading south around 62, whilst THE momentum indicator has turned flat within positive territory. In the same chart, the 20 SMA, remains flat around 7,212. Shorter term, and according to the 4 hours chart, the 20 SMA has partially lot upward strength, with the index stuck around it, whilst technical indicators head modestly lower around their mid-lines, coinciding with the longer term perspective and supporting a downward corrective movement for this Tuesday.

Support levels: 7,254 7,212 7,162

Resistance levels: 7,354 7,390 7,430

DAX

European shares opened higher, but the enthusiasm faded as the day went through, with the major indexes closing anyway with gains. The German DAX added 71 points or 0.60% to close at 11,827.62, after peaking at 11,860 right after the opening. RWE AG was the best performer up 1.49%, followed by Deutsche Telekom that gained 1.18% of talks of a merger involving its US mobile unit. Beiersdorf topped losers' list, down 1.88%. The index presents a bullish tone in its daily chart, as the index settled not far from the multi-month high posted last January at 11,891, and well above a bullish 20 DMA, whilst technical indicators have recovered their bullish slopes within positive territory. In the 4 hours chart, the index is also above a bullish 20 SMA, currently at 11,782, whilst technical indicators are losing their upward strength, but holding within positive territory, rather reflecting the limited intraday volume than suggesting upward exhaustion.

Support levels: 11,782 11,730 11,694

Resistance levels: 11,848 11,891 11,930

STOCKS

Nifty, Dow, Dax and Shanghai look bullish just now with resistance coming up above current levels. We could possibly see a rise in the next 3-4 sessions before a sharp corrective fall. Nikkei is almost range-bound and could be stuck to the immediate channel.

Dow (20624.05, +0.02%) was closed yesterday but could move towards 20800 tonight. . As mentioned yesterday, we need to see if it turns down from 20800 or breaks higher.

Dax (11827.62, +0.60%) has moved higher from previous levels but needs to break above 11893 to move higher towards 12000. It could possibly take a couple of sessions to move higher.

Nikkei (19339.63, +0.46%) is rising in line with our expectation ad could move towards 19500 just now. Resistance is seen at higher levels near 19620 which is likely to hold in the medium term.

Shanghai (3244.02, +0.13%) has moved up to test 3250 as expected. A small dip here could be expected before it starts rising towards 3275-3300 levels in the longer term. Overall trend is bullish.

Nifty (8879.20, +0.65%) recovered losses seen on Friday coming back to levels above 8850. It could test crucial resistance near 9000 from where a sharp corrective fall may be expected. Immediate view is on the upside.

COMMODITIES

Gold (1232) may test the support of 1215 due to fresh strength in Dollar (101.16).

Silver (17.91) is also trading within its previous range of 17.60-18.35. But as long as copper is holding above 2.65-70 region, its difficult to expect fresh low in Silver.

Brent (56.26) and WTI (53.75) both are trading within their respective ranges of 53-58 and 50-55 with no directional bias and this horizontal movement may continue for a few more days.

Copper (2.75) is trading within the range of 2.60-83 though it is still holding its upward trend line support since October 16.

FOREX

The market is searching for clues if the Fed will hike rates in Mar’17 or not while Dollar is strengthening on the back this continued speculation.

Dollar Index (101.20) is trading close to the interim resistance of 101.25-40 and a break above 101.40 may take it to the major resistance of 101.70-90. The immediate bullish sentiment is in line with our expectations and may keep Dollar in the range of 100.40-101.70 for the rest of the week.

Euro (1.0584) is weakening as expected and may test the interim support of 1.0550-40 in the way of 1.0500-1.0450 levels if 1.0550 fails to contain the decline.

Dollar-Yen (113.53) is trading above the resistance of 113.50 which confirms a very short term bottom at 112.58 with increasing chances of testing the major resistance near 114.80-115.00.

Pound (1.2453) is in a contracting phase for the last few sessions and a breakout from the range of 1.2375-1.2525 may emerge soon. Bidirectional possibilities open at this point so bias is modified to neutral.

Aussie (0.7674) has been testing the significant near term support 0.7650 for the last 3 sessions but yet to bounce back. Repeat - it remains to be seen if it manages to bounce from the support or not as a break below 0.7650 may weaken the uptrend considerably. The major resistance remains unchanged at 0.7750-0.7800.

Dollar Rupee (66.92) tested the immediate support of 66.90 below which the major support band of 66.70-50 come into play while 67.15-20 can be tested again if 66.90 holds. It remains to be seen in the opening hour today if 66.90 holds or breaks. Bias neutral at this point.

INTEREST RATES

The US yields were closed yesterday but could open on the upside today. The 5YR (1.93%), 10YR (2.45%) and the 30Yr (3.05%) may rise towards 1.96%, 3.00% and 3.10% respectively in the near term.

The German-US 2Yr (-2.07%) has fallen sharply from levels near -2.00%. It could possibly extend the fall towards -2.11%, seen previously on 28th Dec’16. In that case we could expect some more fall on the Euro, given the rise in the Dollar Index above 101. (Refer to FOREX section above)

The Japanese yields are rising. The 5YR (-0.10%) could rise a little more towards -0.08% in the next couple of sessions before coming off from there.

Sleepwalking

With US markets closed for Presidents Day holiday, markets have done little more than moved sideways in soundless trade. With few news events to influence rates markets, it was a very dull day in the currency markets. While most assets classes were quiet but industrial metals prices soared with Iron ore showing the way trading to another multi-year high as the billet price rose three times during yesterday trading session.

Trader frustration is building as narrow trading ranges persist as contrasting market drivers confuse and the Trump headline effect is waning. While dealers spent the last few trading days sleepwalking, there are enough moving parts to keep things interesting, with European risks smouldering and Fed Minutes on tap as Fed watch is creeping back in the headlines.

Euro

EUR traded a little heavy, but with much ink spilt over the French elections, the Euro has held remarkably well, as traders donned their noise cancelling headphones, not wanting to get emotionally caught in EU political melodrama at this stage. G-10 traders are struggling to find a near-term catalyst for US dollar strength. Given the divergent market drivers, Euro political risk, and tepid dollar demand, I cannot help but think the current range-bound market will persist.

US Dollar

I sense a subtle shift from Trump headline drove risk, to a more Fed focus as the game of words should accelerate this week with the plethora of Fed speak leading up to the FOMC minutes release. However, if we are expecting the Feds to raise the March flag, you may be disappointed as it is doubtful the FOMC minutes will resolve any debate on the fuzzy USD picture. However, of concern to the dollar bulls is even after last week’s hawkish delivery the Greenback failed to rally significantly and could not even maintain it prior levels

Australian Dollar

The Australian dollar continues to trade constructively as it has done so since the last China PPI print.Last week’s profit taking move lower has run its course, and the Aussie is ready to pounce on the 77 level after another stellar performance in Iron Ore prices yesterday. With little new on offer from the RBA minutes although members did not downward pressure on inflation could be more persistent than assumed, other than an unlikely event of the Fed aggressively talking up the March rate hike, the Australian dollar should remain very much in play.However, the pair needs to make progress above the .7800 barrier to gain any significant momentum.

Japanese Yen

Mired in the 112-115 range as dollar bulls grow increasing frustrated that the dollar can not make a convincing move to 115.0. With political angst brewing in Europe, I suspect this will cap dollar upticks until greater clarity on US Fiscal and Tax policies emerges.

GOLD - The commodity continues to retain its upside pressure but with caution. On the downside, support comes in at the 1,220.00 level where a break will turn attention to the 1,210.00 level. Further down, a cut through here will open the door for a move lower towards the 1,200.00 level. Below here if seen could trigger further downside pressure targeting the 1,190.00 level. Conversely, resistance resides at the 1,240.00 level where a break will aim at the 1,250.00 level. A turn above there will expose the 1,260.00 level. Further out, resistance stands at the 1,270.00 level. All in all, GOLD looks to strengthen further.

With the US stock market (SP500 on the Vantage FX MT4 platform) making ANOTHER new high overnight, we turn our attention to an early week look at Indices markets.

Now, we had previously highlighted the following SPI200 range on the blog. Of course if you open up the chart now and take a look how that coiling triangle pattern broke out, it went straight to the top of the range, and immediately onto test higher resistance from there:

SPI200 Daily:

Daily resistance that you can see has held for now, printing a pretty obvious double top in the process.

I'll let you zoom out a little further yourself to see the previous price action at this level back in 2015, but price is most definitely also pushing into a larger zone of interest in any case.

SPI200 Hourly:

Taking another couple of steps down to the hourly, I've drawn a lower time frame level that we can possibly use to manage our risk around for tight risk:reward IF the higher time frame double top does in fact hold.

GBP/USD has started the week with gains. In the North American session, the pair is trading at the 1.2470. On the release front, British housing and industrial data climbed higher in February. Rightmove HPI posted a strong gain of 2.0%, its strongest gain since February 2016. CBI Industrial Expectations jumped to 8 points, easily beating the forecast of 5 points. The indicator is pointing to optimism over industrial orders, following two years of declines. On the release front, US markets are closed for Presidents' Day, so we expect light trading and limited movement from GBP/USD in the North American session. On Tuesday, BoE Governor Mark Carney testifies before Parliament's Treasury Committee on the central bank's inflation report.

The BoE released its quarterly inflation report on February 2, when the central bank also held the benchmark rate at 0.25%. At that time, BoE Governor Mark Carney said that the BoE expected inflation to reach its target of 2 percent in February. However, Carney added that it had lowered its forecast for inflation in 2019, due to a stronger pound and an increase in markets bets on higher interest rates. Carney will be grilled on the BoE inflation forecast, as well as his views on Brexit and the current political climate. Carney has long warned about the dangers of Brexit on the economy, and is likely to include the new Trump administration as a key uncertainty for the British economy.

With Fed Chair Janet Yellen's giving the US economy a thumbs-up last week, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed's 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, "bad for business".

The increasing levels of volatility the Greenback has dished out this month continues to highlight how the currency remains entangled in a fierce tug of war between the Fed hawks and President Trump. Although it may be clear that Trump may want a weaker Dollar to help US exports become competitive on the global markets, the heightened expectations of a proposed expansionary fiscal plan which will be supportive of US growth may uplift the Greenback. While the Trump fuelled uncertainties and fears of protectionism policies impacting US growth may limit gains on the Dollar in the short term, prices may be poised to rally higher in the medium to longer term on the prospects of higher US interest rates. With the Federal Reserve, independent of the government, proposing an expansionary fiscal plan that may bolster US growth should encourage further US rate increases ultimately empowering the Dollar. From a technical standpoint, the Dollar Index has been on standby during Monday's trading session with prices hovering around 100.85 as of writing. Weakness below 100.50 in the short term could encourage bearish investors to send the Dollar Index back towards 100.00.

Currency spotlight - GBPUSD

The heightened political risks around Brexit have ensured Sterling vulnerability remains a key market theme for the first quarter of 2017. While economic data from the UK has on many occasions displayed signs of resilience post-vote to leave the European Union, it is the persistent uncertainty which has effectively dented investor attraction towards the Pound. The live threat of economic fundamentals discarded amid the Brexit developments could punish Sterling further, with investors solely directing their attention towards how the UK economy fares after the Article 50 is invoked in early March. Sterling remains fundamentally bearish and the terrible cocktail of jitters coupled with anxiety should limit upside gains. From a technical standpoint, the Sterling/Dollar remains slightly pressured on the daily charts with weakness below the 1.2400 support opening a path lower towards 1.2200.

Commodity spotlight - Gold

The rising political risks across the globe and overall market uncertainty have boosted Gold's safe haven allure with prices trading around $1235.70 as of writing. This yellow metal is firmly bullish on the daily charts and could receive a further boost to the upside if the Dollar comes under renewed selling pressure. From a technical standpoint, the consistently higher highs and higher lows on the daily chart coupled with prices trading firmly above the 20 simple moving averages have suggested that Gold remains tilted to the upside. A technical breakout and daily close above the $1240 resistance could encourage a further incline higher towards $1250 this week. This bullish daily setup remains valid as long as prices can keep above the previous $1220 higher low.

After an uneventful week, USD/CAD is showing little movement in the Monday session. Early in North American trade, the pair is trading just above the 1.31 level. On the release front, US markets are closed for Presidents' Day, so traders can expect a quiet day from USD/CAD. In Canada, Wholesale Sales jumped 0.7% in December, above the estimate of 0.4%.

With Fed Chair Janet Yellen's giving the US economy a thumbs-up last week, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed's 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, "bad for business".

The US economy continues to perform well, as underscored by sharp economic data on Thursday. Unemployment claims were slightly higher at 239 thousand, but beat the forecast of 245 thousand. On the manufacturing front, the Philly Fed Manufacturing Index soared to 43.3 points, crushing the estimate of 18.5 points. This marked its highest level since 2011. Earlier in the week, the Empire State Manufacturing Index also climbed sharply, with a reading of 18.7, compared to the forecast of 7.2 points. The surprisingly strong data is welcome news from the manufacturing sector, which like other industrialized countries, has been battered by globalization. President Trump has promised to bring manufacturing jobs back to the US and invigorate the struggling sector. There was more good news from the inflation front, as PPI and CPI posted respectable gains of 0.6% in January, above their estimates.

The Japanese yen is almost unchanged at the start of the week. In the Monday, session, USD/JPY is trading just above the 113 line. On the release front, Japan's trade surplus fell sharply to JPY 0.16 trillion, well short of the forecast of JPY 0.28 trillion. This marked the smallest surplus since January 2016. Later in the day, Japan releases two minor events, Flash Manufacturing PMI and All Industries Activity. US markets are closed for Presidents' Day, so we're unlikely to see much movement from the pair.

After Fed Chair Janet Yellen's upbeat take on the US economy, the markets are keen to review the Fed policy minutes, which will be released on Wednesday. Testifying before Congress last week, Yellen noted that inflation is moving towards the Fed's 2 percent target, the labor market remains red-hot and consumer spending is strong. Yellen strongly hinted that a rate hike was imminent, leaving the markets to speculate if the Fed prefers to make a move in March or June. If the US economy stays on track in 2017, analysts expect two or three rate hikes of a quarter-point. At the same time, the Fed wants to take into account the economic stance of the new administration, but this remains an elusive goal. Donald Trump continues to have difficulty filling in key cabinet positions and the media continues to probe connections between Trump officials and Russia. Trump has fired back by bitterly attacking the media, and lost in the mayhem is a clear and coherent economic policy. Although Trump has been in office for just over a month, the perception of a muddled and disoriented White House is creating uncertainty in the markets, and is, as Trump would say, "bad for business".

Japan's economy is on a modest upswing. GDP has expanded over four consecutive quarters and inflation continues to point upwards, although it remains well below the BoJ target of two percent. At the same time, the new Trump administration could pose a serious challenge for Japan. Trump has paraded the motto of "America first" and withdrew the US from the Trans-Pacific Partnership, a trade agreement in which Japan is a major partner. Trump has charged that Japan is manipulating its currency to gain an unfair trade advantage, and this disputed threatened to sour the recent meeting between Prime Minister Shinzo Abe and Trump in Washington. However, the potential crisis was quickly defused, as the two leaders agreed that their finance ministers would conduct bilateral talks to discuss currency policy. Abe has dodged a bullet for now, but if USD/JPY pushes above the 120 level, the war of words over exchange rates could be renewed. Trump remains concerned about the huge US trade imbalance with Japan and will want to make changes in the US-Japan trade relationship. Japan is heavily dependent on its export sector, and any protectionist moves by the US, such as import taxes, could hurt the Japanese economy.

Quiet start to trading week

Notes/Observations

Overnight:

Asia:

Japan Jan Trade Balance registers its first deficit in 5 months as imports rise for 1st time in over two years

Europe:

ECB's Lautenschlaeger (Germany) welcomed the recent rise in inflation but added it was too soon for any rate move. Hoped the ECB could scale down its bond-buying program before year-end but not raise interest rates.

German Chancellor Merkel reiterated view that ECB tailored its policies for all of Europe and not strictly to Germany

German Fin Min Schaeuble: Greece would not have any problems if it implemented the agreed-upon reforms

German DBB union says wages for 2M civil servants to rise 2% this year and by 2.35% in 2018

Matteo Renzi has resigned as leader of Italy's ruling Democratic Party; in a bid to win a fresh, stronger mandate before parliamentary elections (**Note: move seen as setting up a leadership battle that could hoist him back into the nation's highest office)

European Commission to warn Italy on Wed, Feb 22nd about disciplinary measures for not meeting public debt reduction targets unless deficit is reduced as promised

Canadian ratings agency DBRS affirmed Netherlands sovereign rating at AAA; stable trend

UK House of Lords begins two days of Brexit debate on article 50

Americas:

Fed's Mester (hawkish, non-voter): Would be comfortable raising rates at this point if economy keeps current pace of performance; Fed not behind the curve on rates

Economic data

(DE) Germany Jan PPI M/M: 0.7% v 0.3%e; Y/Y: 2.4% v 2.0%e

(FI) Finland Jan CPI M/M: -0.6% v +0.2% prior; Y/Y: 0.8% v 1.0% prior

(JP) Japan Jan Convenience Store Sales Y/Y: 0.1% v 0.5% prior

(TR) Turkey Feb Consumer Confidence: 66.7 v 68.0e

(TW) Taiwan Jan Export Orders Y/Y: 5.2% v 7.4%e

(HK) Hong Kong Jan Unemployment Rate: 3.3% v 3.3%e

Fixed Income Issuance:-

None seen

SPEAKERS/FIXED INCOME/FX/COMMODITIES/ERRATUM

Index snapshot (as of 10:00 GMT)

Indices [Stoxx50 +0.4% at 3,315, FTSE flat at 7,301, DAX +0.6% at 11,826, CAC-40 +0.1% at 4,874, IBEX-35 +0.4% at 9,541, FTSE MIB +0.1% at 19,032, SMI +0.3% at 8,532, S&P 500 Futures +0.1%]

Market Focal Points/Key Themes: European equity indices are trading generally higher in the morning session after an overall positive end to the Asian session overnight; shares of Deutsche Telekom leading the gains seen in the Eurostoxx after Softbank was reported to approach the company on merger of Sprint and TMUS; shares of Unilever however trading sharply lower, rebounding all of Friday's gains after Kraft withdrew its $143B takeover offer over the weekend; Banking stocks trading generally higher across the board; shares of RBS the notable gainer in the FTSE 100 after the company issued an update on remaining State Aid obligation; Commodity and mining stocks trading generally higher in the index as oil and commodity prices trade higher intraday.

No upcoming scheduled US earnings today due to Presidents' Day holiday.

Equities (as of 09:50 GMT)

Consumer Discretionary: [Bovis Homes BVS.UK -9.7% (FY16 results), Telegraaf Media Groep TMG.NL +3.8% (increased conditional proposal from Mediahuis/VPE of €5.90/share), Unilever UNA.NL -6.3% (Kraft steps down from merger talks)]

Energy: [CGG CGG.FR -2.5% (extends consent solicitation deadline for 2017 bondholders)]

Financials: [RBS RBS.UK +5.7% (Confirms RBS's remaining State Aid obligation; takes £750M provision for William & Glyn sale plan)]

Healthcare: [AstraZeneca AZN.UK -0.2% (Licenses Zoladex to TerSera)]

Industrials: [Boskalis BOKA.NL -5.2% (to report non-cash impairment of €840M in FY16 results), LifeWatch LIFE.CH -1.2% (Discloses terms of public takeover offer from Aevis at CHF12.40-13.60/shr), Vedanta VED.UK -0.1% (Q3 results)]

Materials: [Covestro 1COV.DE -3.7% (Q4 results), Pan African Resources PAF.UK -8.3% (mining accident, cuts gold production)]

Telecom: [Deutsche Telekom DTE.DE +3.3% (Softbank reportedly approached Deutsche Telecom on merger of Sprint with T Mobile US)]

Speakers

EU Commission President Juncker could step down from position as soon as March. EU official later refuted the speculation as ‘fabrication' (**Note: On Feb 16th reports circulated that EU's Juncker would not seek 2nd term in 2019)

Singapore Finance Ministry presented its 2017 Budget which would address weakness in marine and construction sectors and bring forward S$700M in projects to start in FY17 and FY18

Saudi Arabia Dec oil production at 10.465M bpd, -255K bpd - JODI

Currencies

FX markets were basically locked within recent ranges in quiet trade with overall global participation low alongside the US markets closed for the Presidents' Day holiday. The USD retraced some of its recent strength as dealers debated the possibility of the next Fed rate hike being pushed back to May instead of March

EUR/USD was holding above the 1.06 level but faced headwinds as the pair struggled for traction after suffering significant losses at the end of last week on renewed concerns about the upcoming French elections

Fixed Income:

Bund futures trade at 164.40 down 3 ticks in quiet trade with the US cash markets shut in observance of Presidents day. Continuation of the recent uptrend targets Friday high at 164.64 followed by 164.94. Support moves to 164.05 then 163.62, 163.13, 162.92 followed by 162.44.

Gilt futures trade at 126.25 down 16 ticks drifting off 126.37 high in quiet trade tracking Bunds lower. Resistance remains at 126.70 followed by 127.16. Support moves to 162.05 followed by 125.63 then 125.30. Short Sterling trades virtually flat across the curve. Jun17Jun18 trades lower to 12/13bp.

Monday liquidity report showed Friday's excess liquidity rose to €1.302T up €2B from €1.300T prior. Use of the marginal lending facility rose to €623M from €52M prior.

Corporate issuance saw last week ended at $23B via 31 tranches, with February volume at $47.9B order. For the week ahead, analysts expect between $15-20B to come to market. In Euro denominated issuance, just shy of €20B came to market last week with three part offerings Mckesson and Pemex some of the notable issuers last week.

Looking Ahead

(GR) Eurogroup on Greece - (UK) House of Lords begins debate on Article 50 Bill

(IL) Israel Feb 12-month CPI Forecast: No est v 0.7% prior

(BR) Brazil Jan Total Federal Debt (BRL): No est v 3.113T prior

05:30 (NL) Netherlands Debt Agency (DSTA) to sell €2.0-4.0B in 3-month and 6-month Bills

05:30 (PL) Poland to sell Bills

06:00 (UK) Feb CBI Industrial Trends Total Orders: 4e v 5 prior, Selling Prices: No est v 28 prior

06:00 (IL) Israel Dec Manufacturing Production M/M: No est v 3.3% prior

06:00 (IL) Israel to sell Bonds

06:25 (BR) Brazil Central Bank Weekly Economists Survey - 06:45 (US) Daily Libor Fixing

07:00 (IN) India announces details of upcoming bond sale (held on Fridays)

07:00 (DE) German Fin Min Schaeuble at Belgium business lobby

08:00 (RU) Russia Jan Unemployment Rate: 5.4%e v 5.3% prior, Real Disposable Income: -2.9%e v -6.1% prior, Real Wages Y/Y: 1.9%e v 2.4% prior

08:00 (RU) Russia Jan Real Retail Sales M/M: -27.0%e v +18.3% prior; Y/Y: -5.1%e v -5.9% prior

08:00 (ES) Spain Debt Agency (Tesoro) announces size of upcoming actions in week

08:15 (UK) Baltic Dry Bulk Index

08:30 (CA) Canada Dec Wholesale Trade Sales M/M: 0.4%e v 0.2% prior

08:50 (FR) France Debt Agency (AFT) to sell €5.3-6.5B in 3-month, 6-month and 12-month Bills

09:30 (EU) ECB announces Covered-Bond Purchases

09:35 (EU) ECB calls for bids in 7-Day Main Refinancing Tender

09:50 (UK) Bank of England Bond Buying Operation (APF Gilt purchase operation between 3-7 years)

10:00 (EU) Euro Zone Feb Advance Consumer Confidence: -4.8e v -4.7 prior