Data/Event Risks
- EUR: After downward revisions to manufacturing data in periphery last week, a close eye will be kept on the final services numbers, which could make euro vulnerable to the downside. Finance ministers are also meeting today, so watch out for stray comments.
- USD: Non-manufacturing PMI seen steadier at 55.0. Historically, a number more than 1 big figure either side of the expectation has been needed to elicit a notable dollar reaction (greater than 15 pips on EURUSD).
- GBP: Watching the services PMI closely after the weaker manufacturing data last week added to the weight of bad news for sterling. Another weak outturn could see GBPUSD threaten to push below 1.50 once again.
Idea of the Day
You can’t keep a good currency down and that certainly remains the case for the Aussie. Yesterday saw the Aussie pushing 8 months lows vs. the USD (at 1.0115) with AUDUSD breaking below what has become a very established range.
But it doesn’t give up that easily, with the overnight trade seeing a recovery back above the 1.02 level. The steady rate decision from the RBA provided the catalyst to the move higher, with stronger retail sales also supportive in the background. What this shows is that it’s going to take a lot to push the Aussie lower on a sustained basis. AUDUSD support comes in at 1.0115/00.
Latest FX News
- EUR:  Some stability emerging on EURUSD, in part owing to the fact that a sustained break below 1.30 was not achieved during Monday. Finance ministers meet today and the electoral situation remains unresolved in Italy, so the uncertainty remains in place.
- JPY:Â The nominees for deputy governor positions at the Bank of Japan were speaking overnight. No major surprises, with the more active of the two underlining (Iwata) his preference for allowing the BoJ to buy longer-dated bonds and hinting that buying of foreign bonds should remain an option, even though there is no need at present. USDJPY is holding close to the 93.00 area for now.
- GBP: Â Putting up a fairly strong fight against a sustained move below 1.50 on GBPUSD. This is not surprising just from the fact that cable does look over-sold on the charts and may well need a fresh dose of negative news in order to move lower.
- AUD: Rates on hold at 3.00% after the latest RBA meeting. The door was kept open for lower rates if needed, the statement reflecting on the fact that “The inflation outlook… would afford scope to ease policy further, should that be necessaryâ€. The Aussie was stronger on better than expected retail sales data for January, rising 0.9% on the month.
