Short recap
Asia in red on Fed rate hike prospects and slowing China
China working on reforms to reign in the debt load, put in place measures to contain future financial crisis and shift the export lead to consumer oriented economy
North Korea playing with fire again
German Private banking association don’t see the need for ultra-loose policy from ECB anymore
Oil lower on Russia production cut compliance
Trump verbally dumping MXN lower but is it really what he wants?
Weaker MXN means Mexico more competitive
Gold – net longs up 48% hitting 3-month high (COT)
Deutsche Bank selling EUR 8 bln of shares and stake in Asset management business
Need to strengthen position and increase the capital ratios
If sold at EUR 11.65 per share would bring the CET1 to 14.1%
A small surprised in dividend of EUR 0.19 while market not expecting anything
Peugeot-Citroen helped GM to exit from Europe by buying Opel-Vauxhall
OMV buying a share in Russian gas field (EUR 1.75 bln)
Yellen’s speech on Friday:
“A rate increase at next meeting "would likely be appropriate" if Fed determines that data on employment and inflation are continuing to move in line with expectations.”
Well a magic word “if”…
EURUSD and USDJPY – back to square one
Pace of rate hikes not expected to changed on Mar 15 even if Friday’s NFPs are strong
That’s why USD reaction on Fischer and Yellen muted
Do we really have more USD strength in store?
COT report – cutting USD long posit
EURUSD daily levels:
3rd res 1.0789
2nd res 1.0706
1st res 1.0664
Pivot 1.0581
1st sup 1.0539
2nd sup 1.0456
3rd sup 1.0414
USDJPY daily levels:
3rd res 115.47
2nd res 115.11
1st res 114.53
Pivot 114.17
1st sup 113.60
2nd sup 113.23
3rd sup 112.66
FX OPTIONS
EURUSD - Saw a massive selloff in the middle and longer end of the curve on Friday due to:
Le Pen losing ground, risk on in stocks, spot higher from 1.0500 despite Fed speakers and US data, and March hike already priced in
1w covering ECB and NFPs at 7.5 vol, what is the spot range of 110 pips
3m ATM down 0.9 vol to 9.35 level (3m covering FR elections)
BONDS – A heads up…
10 yr Trys yield at 2.47%
10 yr Bunds yield at 0.35%
A bit of divergence (more than 200 bps) between 10 yr Trys and Bunds
Is the market really reflecting the reality of rise in price and economy growth in EZ that way?
More reasonable level for Bunds yield would be around 1% than 0.35% now
Just imagine the shift if it materializes
ECB – QE and wording on inflation/growth crucial
As the political risks in EZ are fading away (Le Pen)
Data
The whole week will be about the below. Today we have EU Summit but no major headlines expected.
Thu:
ECB – expecting just some verbal tweaks on QE, bond buying, may be reshuffle of maturities…etc.
Markets will be searching for any hints on change in the position on rise in prices and growth
No major change expected despite Buba seeing world differently
Fri:
US NFPs – headline figure, unemployment rate and Average hourly earnings will be watched
Earnings is the number to look at if no bad surprise in headline
Should you have any questions feel free to contact me anytime.
Good luck Champs!
Mr Hawk
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