EURUSD witnessed a decent move before good euro employment data

Market Review

The S&P gapped higher by 5 points on the open yesterday as news that John Kerry and Russian Foreign minister Sergey Lavrov had been relatively successful and alleviated some of the current pressure in Eastern Europe. Further to this, Kiev announced that the Russian troops on its eastern borders had been pulling back the last couple of days, and it seems Putin is successful in acquiring Crimea by giving up the rest of Ukraine. As discussed earlier though, we do not believe this will end with Crimea and are looking forward to news surrounding this for the next six months. In Europe, inflation data showed a slightly lower number than expected though Jens Weidman of the Bundesbank quickly made the move reverse by commenting that the current effects we are witnessing are seasonal and should not be taken too much in to account for future policy measures as they are positive on the economy. Yesterday’s US10Y strategy was obtained and almost hit first target, though as we met support at the morning low and came back to the entry we booked the position at scratch. Crude oil worked out nicely and we booked 47 ticks of the move down. As the commodity broke the low we were looking to take some off at the second target but moved the stop to 5 ticks above the 1 st target and this was obtained when crude completely reversed and went up to make a new high for the session.

Today's Fundamental View

Overnight saw the release of Chinese data which was overall positive with the official manufacturing PMI number being the best since December and indicating the 17th straight month with manufacturing growth. The independent HSBC reading Is on the other hand showing 3 rd straight monthly decline in the manufacturing sectors activity on its final reading – contradicting the official numbers. This morning has witnessed one decent move in the EURSUD before the release of slightly better than expected unemployment rate in the Euro area, which combined with the Bundesbank comments yesterday has seen some sustained upside. Of note, Germany’s unemployment rate is currently at its lowest level since the unification in 1989, and this will undoubtedly give Germany’s representatives more ammunition to halt any form of quantitative easing, which the country is famously averse to commit to. Due to the high volume in the S&P on cash open yesterday, we believe it is likely that the markets will have a decent amount of activity today as well, which is not always the case considering the employment number on Friday, and believe this may indicate a lessened sensitivity towards it in regards to what effects it will have on financial stocks, assuming it does not miss or beat by anything extremely noteworthy. The most important data of the afternoon is ISM Manufacturing which is about to post its 9 th consecutive month of growth in the American manufacturing industry. The recent data for this sector have not been amazing, but we feel that the wind is about to change for the better. Today’s strategy will go with the trend in the S&P and US10Y, long EURUSD based on this mornings fundamentals, whilst crude

Alternative View

Adverse comments from central bankers may adversely affect the markets, as will any developments in Ukraine.