ASIA-PACIFIC

Equities in the region traded lower for most of the session following Wall Street`s lead as sliding energy prices dampened sentiment. The Nikkei managed to stage a last minute rally, finishing up 0.75%, in large part due to the JPY losing some ground from its recent highs and easing pressure on exporters. Chinas Shanghai Comp could not turn around its losses after PBoC failed to impress with its lack of liquidity injections and the index closed at -0.9%.

Releases out of the region on Monday are as follows:

China:

  • CPI y/y previously at 2.3%
  • PPI y/y previously at -4.9%

JAPAN:

  • Core Machinery Orders m/m previously at 15.00%

USA

A risk off sentiment prevailed in yesterday’s session as markets sold off financials over concerns that lower for longer interest rates are hurting banks and poor Q2 earnings forecasts for equities in general start to filter through the markets. The DJIA finished down 0.98%, the S&P 500 finished at -1.2% and the NASDAQ-100 finished down 1.51%.

Overnight, the USD recovered some ground after Fed Chair Yellen took a more hawkish tone than usual and praised the US economy for the tremendous recovery it has made and stating that the economy is on the path for additional rate hikes, albeit gradual.

Today we expect Wholesales inventories m/m (expected at -0.2%) to be released and FOMC member Dudley to take the stand at the University of Bridgeport, where any hawkish comments will see markets buying the USD.

EUROZONE

Yesterday release of the ECB minutes struck a dovish tone, which saw the EUR depreciate against its rivals. The minutes noted that some members were advocating a sharper reduction in the March rate cuts. However, Draghi brought a more neutral tone as he commented that the economy was recovering albeit at a moderate pace. We expect any further comments out of the ECB to be scrutinised as market begin to feel a wobble and a bearish air resurfaces for the area.

UK

GBP bulls will be looking at today’s data with hope in their eyes as they hope the upcoming data is enough to reverse the recent losses they have experienced. GBP bulls have staged a notable stand against the USD at 1.4050 and positive data today could well see their hard work pay off as the pair moves higher. The data expected is as follows:

  • Manufacturing Production m/m expected at -0.2%, lower than last month’s 0.7%
  • Goods Trade Balance expected at -10.3B, unchanged from last month’s figure
  • Industrial Production m/m expected at 0.1%, lower than last month’s 0.3%