The risk appetite that started overnight on the back of the China stimulus news carried over into the NY session in a big way. US equities rallied about 2.5% on the day after falling for five consecutive days and 11 of the past 12 sessions to boot. Treasuries were sold on the flight from safe assets and the 10-year yield jumped more than 10bps to 2.98%. Gold was also lower again, shedding -$8 to just above near-term support at the 900 level. This happened despite more bad economic news out of the US.
The ADP employment report showed a stepper than anticipated -697K decline for private payrolls in February after a downwardly revised -614K read the prior month. If past is prescient, this suggest a print in NFP this Friday very close to the -700K mark. The ISM services index was better than forecast, though at 41.6 it was still weaker than the prior month's 42.9 result. The bright spot was the uptick in the employment component, which took some of the edge off that horrid ADP number.
The flavor in FX was to punish the safe haven US dollar. EUR/USD shot up more than 90 pips and was sitting just below the 1.2650 hourly trendline barrier near the NY close. Above there should open up potential to the 200hr SMA just below the 1.2700 area. The price action in the yen crosses was also reflective of an overall weak dollar. USD/JPY slipped -30 points to just above 99 support while EUR/JPY jumped more than 50 pips into the 125.10/20 area.
Oil prices rallied a hard $2.20 to above $45/bbl as the China news coupled with a draw in weekly crude inventories put a bid under the commodity. The price action here had USD/CAD under massive pressure the entire session and Loonie sank a sharp -130 pips in NY trading towards 1.2740/50. Watch for a short-term reversal in oil to send USD/CAD higher over the next few sessions. The critical 1.30 target still remains within striking distance.
Upcoming Economic Data Releases (Asia Session) prev est
- 3/4 23:50 GMT JN Capital Spending 4Q -13.00% -16.10%
- 3/4 23:50 GMT JN Foreign Buying Japan Bonds 27-Feb -Â¥75.4B - -
- 3/4 23:50 GMT JN Foreign Buying Japan Stocks 27-Feb -Â¥450.8B - -
- 3/4 23:50 GMT JN Japan Buying Foreign Stocks 27-Feb ¥215.1B - -
- 3/4 23:50 GMT JN Japan Buying Foreign Bonds 27-Feb ¥1231.1B - -
- 3/5 0:00 GMT NZ Results of Government Bond Sale
- 3/5 0:30 GMT AU Trade Balance JAN 589M 1100M
- 3/5 0:30 GMT AU Building Approvals (MoM) JAN -2.90% 1.00%
- 3/5 0:30 GMT AU Building Approvals (YoY) JAN -32.90% -30.40%
