It was a quiet affair in Asia this Monday, with softer tone around the greenback lifting the sentiment across the fx space, as markets expect the Federal Reserve (Fed) to remain accommodative on its monetary policy stance in the week ahead. Among the G10 currencies, the Antipodeans benefited the most from a broadly weaker greenback, as the 2% rally in iron-ore prices combined with the risk-on action in the Asian equities also collaborated to the upbeat tone. The Aussie extended its rally and conquered the 0.71 handle while the Kiwi headed back towards the 0.6900 level.
The USD/JPY pair also advanced to 111.65, as downbeat Japanese exports data weighed negatively on the Yen. Both the Euro and the pound traded modestly flat, as investors remain cautious amid recent Brexit developments and Eurozone growth concerns. The USD/CAD pair traded weaker and looked to test the 1.33 handle, despite the selling in oil prices. Meanwhile. Gold futures on Comex remained under pressure below the 1300 mark amid an uptick in Treasury yields and US equity futures.
Main Topics in Asia
What The PM Offered The DUP - ITV
Back My Brexit Or We’ll Never Leave, Says Theresa May - The Sunday Times
Saudi signals OPEC may need to extend oil cuts until end-2019 - Reuters
Boris urges May to make final appeal on backstop – The UK Telegraph
Trump-Xi meeting to end trade war may be pushed back to June, sources say -SCP
NZIER lowers New Zealand’s 2019 GDP forecasts
UK business investment to fall by most in 10 years in 2019 due to Brexit - BCC
Australia money markets convinced of two 25bps rate cuts - Bloomberg
Japan trade surplus with US declined 0.9% in February
UK FinMin Hammond: “Significant numbers” of MPs support May’s plan, but “not there yet”
Russia’s Novak: Talks need to be held in May to decide OPEC+ future output policy
Gold: Improving risk sentiment recalls sub-$1300 area
Key Focus Ahead
Markets buckle up for a quiet start to a busy week ahead that is dominated by the key central banks’ monetary policy announcements. On the data front, we have a thin showing in the session ahead, with the only relevant Eurozone trade balance slated for release at 1000 GMT. While at 1100 GMT, the German Bundesbank monthly economic report will be published.
The NA session is also expected to be light on the macro news, with no first-tier US economic releases. At 1230 GMT, the Canadian portfolio investment data will be reported, which likely to virtually have no impact on the markets. Towards NY closing at 2000 GMT, New Zealand’s Westpac consumer survey for Q1 will drop in.
All eyes will remain on the risk trends and Brexit-related headlines, as the UK readies for the third meaningful vote on PM May’s plan scheduled this Thursday, March 21st.
EUR/USD: US-DE 2-yr bond yield spread hits 11-month low in EUR-positive manner
The EUR could soon scale the immediate resistance zone of 1.1335-1.1350. That range has capped upside for the last three trading days. However, with markets pricing in a 2020 rate cut, the bar of (dovish) expectations is set high and the dollar will likely pick up a strong bid if the central bank takes note of the recent improvement in the risk sentiment.
GBP/USD: Buyers and sellers jostle near 1.3300 amid Brexit reports, Fed expectations
The GBP/USD pair clings to 1.3300 ahead of London open on Monday. The quote struggled between optimism surrounding soft/delayed Brexit, doubts over the UK economic growth and expectations that the US Federal Reserve may end up revising its plan to fewer rate hikes in 2019.
Three Highlights in the Week Ahead
Three events next week will shape the investment climate. The Federal Reserve meets and will update its forecasts and guidance. The British House of Commons may vote for a third time on the Withdrawal Bill before Prime Minister May heads …
GBP/USD Forecast: The longer the Brexit extension, the higher the pound potential
The EU leaders convene on Thursday, March 21st to decide on an extension. They are expected to approve it, but want to know why and for how long. If it weren't for Brexit, the jobs report, inflation data, retail sales, and the BOE decision would …
FOMC preview: All eyes on the 2019 dot plot - TDS
Analysts at TD Securities (TDS) offer a detailed preview of Wednesday’s Federal Open Market Committee (FOMC) monetary policy announcement that is scheduled at 1800GMT.
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