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WH Econ Adviser Hassett: US-China deal may be finished some time soon

According to Bloomberg, Kevin Hassett, chair of the White House Council of Economic Advisers, recently said that the U.S. and Chian could reach a final trade deal “some time soon” completing the Wall Street Journal report that claimed a deal could be signed late March when Trump and Xi meet: WSJ report: U.S. / China “agreement is taking shape”.

With the initial market reaction, traditional safe-havens such as the JPY and gold weakened against the greenback, pointing to improving market sentiment.

US: Threat of protectionism prevailing? – NBF

According to Krishen Rangasamy, analyst at National Bank Financial, de-escalation of the U.S.-China trade war does not mean the threat of protectionism has disappeared.

Key Quotes

“The U.S. is once again contemplating using Section 232 of its Trade Expansion Act to impose tariffs on grounds of national security, this time on auto imports. If enacted, those tariffs would not only disrupt global trade but could also potentially tip already-weakened economies of Japan and Germany into recession.”

“Add the possibility of a hard Brexit to the mix and it’s not difficult to imagine a scenario whereby global growth falls under 3%. However, our base case scenario assumes common sense prevails among policymakers as to leave global trade flows largely unimpeded, which explains why we’ve left unchanged our forecast of 3.5% for world GDP growth this year.”

“After enjoying a strong 2018, the U.S. economy now seems to be taking a breather. The services sector moved down a gear in the aftermath of..

EUR/GBP trims losses and approaches 0.8600

The cross bounces off lows in the mid-0.8500s, back near 0.8600.
The softer tone in the Sterling keeps supporting the daily rebound.
Parliament vote on Brexit deal this week is ‘negligible’.

The now softer tone in the Sterling is helping EUR/GBP to rebound from daily lows in the mid-0.8500s and retake the proximity of the 0.8600 handle.

EUR/GBP up on GBP-selling, looks to Brexit

The European cross is fading the initial pessimism and continues to gather traction from daily lows in the 0.8560/55 band, always in tandem with the renewed selling bias hitting the British Pound.

GBP picked up extra downside traction today following disappointing news around the Brexit negotiations, where latest news said the chances of the House of Commons voting a Brexit deal this week appears ‘negligible’.

Earlier in the day, PM May’s spokesman highlighted the recent progress in talks (?) while stressing at the same time that further work needs to be done.

In the UK docket, Construction PMI dropped ..

EUR/USD Technical Analysis: Drops to one-week low, tests 50% Fibo. level support

• The pair extended its intraday rejection slide from 50-day SMA and dropped to one-week lows, further below mid-1.1300s during the mid-European session on Monday.

• A sustained break through 200-hour SMA – for the first time in nearly two weeks, was seen as a key trigger for bearish traders and behind the latest leg of a downfall.

• Meanwhile, the recent price action, wherein the pair repeatedly failed to sustain/build on its momentum beyond the 1.1400 handle, clearly points to persistent selling bias.

• The pair has now dropped to 50% Fibo. level of the 1.1234-1.1420 recent up-move, with bearish oscillators on 4-hourly/daily charts adding credence to the negative outlook.

• However, technical indicators on the 1-hourly chart are already pointing to slightly oversold conditions and warrant some consolidation before the next leg of depreciating move.

EUR/USD 1-hourly chart

EUR/USD

Overview:
Today Last Price: 1.1333
Today Daily change: -32 pips
Today Daily change %: -0.28%
..

USD/JPY stuck in tight range below 112 despite broad USD strength

US Dollar Index rallies to 10-day highs above 96.50.
The modest drop in US T-bond yields helps JPY stay resilient.
Wall Street looks to open modestly higher.

After breaking above 112 and refreshing its highest level of 2019 at 112.08, the USD/JPY pair lost its traction and erased a small part of last week's gains. As of writing, the pair is trading at 111.85, losing 0.05% on a daily basis. However, the fact that the pair still sits around 50 pips above the 200-DMA suggests that buyers are likely to continue to control the price action and today's drop is a technical correction of last week's rally.

The US Dollar Index, which started the week with a bearish gap following President Trump's comments on USD strength and criticism of the Fed's policy over the weekend, rose sharply on Monday and was last seen adding 0.25% on the day at 96.68. Despite the USD strength, however, a 0.35% drop witnessed in the 10-year T-bond yield today caps the pair's gains.

..

ECB: Economic outlook to take centre stage – Rabobank

According to analysts at Rabobank, ECB’s economic outlook will take centre stage in its upcoming meeting and the staff projections will probably be cut, something that’s becoming a recurring theme.

Key Quotes

“We believe that this meeting is too early for changes in the forward guidance.”

“But due to the ECB’s desire to safeguard access to credit, we expect the ECB to follow up on the current TLTRO-II with a fresh series of long-term refinancing operations in the near future.”

“Policy rates

Forward guidance to remain unchanged at “through the summer of 2019”.
Despite guidance remaining unchanged, we don’t expect any rate hikes in 2019 and 2020.”

“Asset Purchase Program

No changes to the reinvestment program or its forward guidance.”

“LTROs

We expect Draghi to mention a successor for TLTRO-II, with allotment starting in June.
This successor will probably focus on maintaining current levels of liquidity.
That said, the ECB may save the official announcement, including the ..

UK: Weakness in construction PMI data – TDS

Analysts at TD Securities note that the UK’s Construction PMI fell below 50 to 49.5 in February to its lowest level since the storm-affected March 2018 print.

Key Quotes

“While activity in the residential sector rose modestly, declines in commercial and civil engineering projects were notable on account of Brexit uncertainty leading to delays in projects.”

GBP/USD drops to session low, bulls struggling to defend 1.3200 mark

• Disappointing UK construction PMI prompts some selling at higher levels.
• A modest pickup in the USD demand further adds to the downward pressure.
• Technical selling below Asian session lows further accelerates the intraday slide.

The GBP/USD pair quickly reversed an early European session spike to 1.3255 area and dropped to fresh session lows in the last hour, filling the weekly bullish gap.

After consolidating through the Asian session on Monday, the pair ticked higher and remained supported by firming expectations of a possible delay to the fast-approaching Brexkt deadline on March 29/softer Brexit.

The uptick, however, lacked any strong bullish conviction, rather remained capped on the back of today's disappointing release of UK construction PMI print that fell to an 11-month low level of 49.5 in February.

Adding to this, a modest pickup in the US Dollar demand, supported by the NY Times report that Huawei is preparing to sue the US government, further collaborated tow..

UK PM May’s spokesman: We are at critical stage in negotiations

British Prime Minister Theresa May's spokesman recently crossed the wires saying that they were at a critical stage in Brexit negotiations with the UK. “We definitely have been making progress with the EU but more work needs to be done,” added the spokesman.

Key quotes (via Reuters)

PM has always said that prosperity has for too long been unfairly spread across Britain.
Stronger towns funds are absolutely not a bribe for labour Brexit votes.
We understand lawmakers will want to scrutinize any changes we secure.
Attorney general continues to pursue legally binding changes to Irish backstop.

USD/TRY flirting with daily highs around 5.4000

The Turkish Lira depreciates once again and tests highs around 5.40.
Turkey inflation figures came in below expectations in February.
CBRT seen ‘on hold’ at its meeting on Wednesday.

USD/TRY keeps the march north unabated so far on Monday and is now gyrating around the key 200-day SMA in the 5.40 region.

USD/TRY stronger post-CPI, looks to CBRT

The pair gained further upside pressure today after inflation figures in Turkey came in below estimates for the month of February. In fact, consumer prices rose 19.67% from a year earlier and 0.16% inter-month.

Additionally, Producer Prices rose 29.59 over the last twelve months and 0.09% on a monthly basis.

In the meantime, TRY remains well under pressure as economic recession is poised to persist for the time being against the backdrop of still high inflation figures and the omnipresent effervescence between the central bank and the Erdogan administration, all ahead of the imminent municipal elections.

What to look for around TRY

TRY ..

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