European FX Outlook: Factory orders and Bundesbank’s Weidmann top the agenda

What you need to know before markets open:

• The global equity markets turned sour, as the S&P 500 saw its biggest weekly selloff in two years.
• Key German political parties add another day in an attempt to form the coalition.

Tuesday’s market moving events

• The Reserve Bank of Australia kept the Cash Rate unchanged in line with expectations.
• German factory orders are set to rise 0.7% m/m in December.
• German Bundesbank President Jens Weidmann opens the Bundesbank Lecture, in Frankfurt at 9:00 GMT.
• The US trade balance is expected to reach a deficit of $52.0 billion in December.
• Canada’s trade balance is expected to reach a deficit of C$2.2 billion in December.
• St. Louis Federal Reserve President James Bullard is scheduled to present on the US Economy and Monetary Policy at the 29th Annual Gatton College of Business and Economics Economic Outlook Conference in Lexington, Kentucky at 13:50 GMT.
• Canada’s Ivey PMI is set to rise to 61.0 in January.
• NZ employment is expected to rise 0.2% Q/Q in the final quarter of 2017 with the unemployment rate dwelling at 4.6%.

Major forex market movers

• With the global equity markets suffering steep correction lower, the US Dollar has been boosted rising some 0.5% on US Dollar index basis. While gains against EUR were mild, GBP sold below $1.4000 level while JPY pushed US Dollar lower.
• With second-tier economic indicators due in Europe on Tuesday, the sentiment is set to drive the FX market.
• Watch NZD after the NZ employment report just one day before RBNZ is set to keep Overnight Cash Rate steady at 1.75%.

Monday’s macro summary

• Japan services PMI rose to 51.9 in January as new order pace quickens.
• China’s services PMI rose to 54.9 in January and the Composite Output Index rose to a seven-year high of 53.7, signaling a solid pace of expansion.
• Spanish services PMI rose to 56.9 in January from 54.6 in December.
• Italian composite PMI index rose to 57.7 in January, up from 55.4 in December and the
• highest reading since July 2007.
• French composite PMI covering the combined manufacturing and service sectors remained steady at 59.6 in January, unchanged from the previous month and down only slightly from November’s six-and-a-half year high of 60.3.
• German services PMI rose to 82-month high of 57.3, up from 55.8 in December with the composite PMI rising to 59.1 in January, the highest in 81 months.
• The Eurozone composite PMI rose to 58.8 in January, its highest level since June 2006 and above the earlier flash estimate of 58.6.
• The UK services PMI decelerated to the lowest level since September 2016 of 53.0 in January.
• Sentix investors confidence decelerated to 31.9% in February.
• The Eurozone retail sales fell -1.1% m/m while decelerating to 1.9% y/y in December.
• Bundesbank’s Andreas Dombret said that public budgets in many Eurozone countries remain vulnerable to shocks.
• The Bank of Japan Governor Haruhiko Kuroda said it is inappropriate to shift monetary policy prematurely just to create future policy tools.