Today's Key Event: G20 Meeting in Moscow

Market Brief

Asia closed the week by a mitigated trading session ahead of G20 meeting, starting today in Moscow. The “currency wars” should be in closer focus during the next two days. ECB’s Weidmann said that there will be no rate cut in the Euro-Zone, while Norges Bank’s Olsen warned to be ready for further rate cuts to counter NOK gains.

The currency markets remain dominated by Yen strengthening, in reaction to expectations that Japan will be under guns in front of World’s leading finance officials regarding the recent heavy depreciation in JPY. Yen gained against all of its major counterparts. USDJPY retreated to 92.25 early in the session. More stops are seen under 92.15 and 92.00. Similarly GBPJPY fell under 143.20, while EURJPY hit 123.20.

The Nikkei 225 fell 1.2% from its 5-year highs. Hang Seng and Kospi index were little changed, while the Shanghai’s Composite and Taiex were closed due to Lunar New Year.

In US, the initial jobless claims surprised to the downside. Versus 360.000 new claimers expected, the economy added only 341.000 additional jobless claims, the continuing claims fell by 100.000. The S&P500 advanced by 0.07, Nasdaq’s Composite added 0.06%, while Dow Jones index retreated 0.07%. The US stock futures erased gains overnight amid Moody’s warned US for more budget measures to ensure smaller debt/GDP levels. Ahead of the March 1st “cliff deadline”, US House Speaker Boehner stated that “the automatic budget cuts will be in place until other spending cuts/reforms occur to balance the US budget in 10 years.

In the Euro-Zone, the widely disappointing GDP numbers pulled EUR to its three-week lows. EUR was the worst performer overnight. The single currency registered a poor rally as ECB’s Weidmann stated that the strong EUR reflected the improved confidence in the Euro-area. Weidmann added that ECB’s President Draghi was not trying the talk down the EUR. Yet, EURUSD traded in a tight range of 1.3348/70 zone in Asia, with decent bids eyed ahead of 1.3300. The key support is seen at 1.3250/70 area.

Today, the focus is on the Spanish January CPI m/m and y/y figures, Italian December Trade Balance, the UK Retail Sales excluding/with Auto Fuel m/m and y/y, Euro-Zone December Trade Balance, Canadian January Existing Home Sales, US February Empire Manufacturing, US December Total Net TIC Flows and Net Long-Term TIC Flows, Us January Industrial Production, US January Capacity Utilization and University of Michigan’s Confidence index.

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