Yesterday / Overnight News
- Asian equity markets traded higher across the board in a continuation of the trend seen on Wall Street with the Nikkei outperforming alongside a weaker Japanese Yen.
- The Aussie Dollar led the way higher for FX markets amid stringer than expected domestic GDP data which saw the AUD/USD break above 0.7200.
- WTI crude futures pared some of yesterday’s gains after a larger than expected build in API crude inventories, although prices have remained above the $34 a barrel level.
- Elsewhere, gold declined as the heightened risk appetite dampened safe haven demand while copper and iron prices advanced to 3 month and near 6 month highs respectively, on the upbeat sentiment with the latter back above the $50 ton level.
- In the US, Hilary Clinton won the majority of the Democratic Party primaries after winning 7 states versus 4 states won by Bernie Sanders, while Donald Trump was projected to win in 7 states for the Republican primaries.
What to Watch for Today and for the week ahead
- European markets are expected to open higher this morning to follow their US and Asian counterparts.
- As Friday’s US February labour market report draws nearer, financial markets will pay close attention to today’s unofficial ADP private sector employment figures as a potential early gauge. We look for a rise of 180K in the ADP data which would add to expectations of a moderate rebound in the official figures on Friday.
- In the UK, there will be some attention on the construction PMI survey which is expected to ease slightly. Of more interest will be tomorrow’s services PMI survey which covers the bulk of the economy. The BoE’s MPC members Broadbent and Cunliffe both speak today.
Euro area data are expected to show continued producer price deflation. Speakers include the ECB’s Coeure and Villeroy, both of whom are considered to be at the dovish end of the spectrum. Spain is trying to form a new government but socialist leader Pedro Sanchez is seen as having only an outside chance of success since his party has just 90 out of 250 seats.
- Finally, on the corporate front today we have a full year 2015 earnings release from ITV, a full year 2015 earnings release and strategy update from Intertek Group Plc and, finally, Q4 2015 earnings releases from Abercombie & Fitch Co and Progressive Corp.
Economic Data Release Schedule
Trade Of The Day
The Yen has fallen further against the greenback overnight and dips in USD/JPY have continued to be shallow which has been reflected in another surge higher in late Asia and early Europe trading and can be put down to the risk mood supporting the currency pair. Technically, USD/JPY has broken above its falling resistance trend line and we are therefore looking for this up move to continue. We will buy at a pull back and retest of the break point, at around the 114.06 mark, and round number and psychological 144.00 mark. We will place our stop just below the last swing low at the 113.69 area and will look to take our profit at the 114.50, 114.86 and 115.16 previous resistance levels respectively.