European Open Briefing


Asia Brief: New Zealand GDP QoQ 0.7 % vs 0.6 % f/c, YoY 3.9 % vs 3.8 % f/c. Japan Trade Balance JPY-949bln vs JPY-1029bln f/c. Japan Exports -1.3 % vs -2.6 % f/c. Japan Imports -1.5 % vs -1.2 % f/c. China House Prices 0.5 % vs 2.3 % f/c. Swiss Trade Balance CHF 1.38bln vs CHF2.32bln f/c.

Global Markets: Nikkei up 1.10 %, Shanghai Comp unch, Hang Seng down 1 %, ASX up 0.15 %. Gold at $1225 (-0.90 %), Silver at $18.56 (-0.90 %), Crude Oil at $92.70 (-0.50 %).

FX Overview: The Greenback gained across the board in Asia. The Fed wasn't very hawkish yesterday, neither was Yellen during her press conference, but the market decided to focus on the dots and this was enough to spark another USD bull run. EUR/USD had a quick spike to 1.2975, but eventually declined to a low 1.2833 in the Asian session. The focus today will be on the TLTRO auction take-up and the results will be published at 0915 GMT. Many expect the result to be another bearish catalyst for the Euro and weak auction demand may send signals to the market that ECB easing is less effective and increase expectations of more action by the ECB via larger ABS purchases or even QE.

Cable is holding well, all things considered. No doubt that short-term, the market is long again in anticipation of a "No" vote. It'll be messy though, and I'd expect to see stop runs in both directions ahead of the final results as liquidity dries up. Fading the extremes seems like the most appropriate strategy for now and if you are also expecting a "No" vote, I think you will be able to buy it at much cheaper levels than it is trading right now. No point in chasing it higher ahead of the results.

Aside from the Indy Ref and the TLTRO, we'll also get the SNB & Norges Bank rate decision and UK retail sales.

Good luck!

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