Asian Session - Commodities Continue to Sell Off
Usd was stronger in Asian session as the commodity sell off carried over from the US session. We don't see any fundamental drivers for this sudden weakness but the combination of Fed aggressive action stabilizing market confidence and the pure weight of trading position seem to be the most likely culprit. However the combination of steady yields and weakness in gold and other commodities could indicate a period of strength for the Usd. In addition should the Fed signal a reluctance to ease further we could be setting up for the second leg of the "Usd smile" theory.
On the continent markets will be watching flash PMI to provide indication of the extent of the slowing down in economic growth in the eurozone. While feb composite rise was a positive sign the index points to moderation in activity. Markets will be watching diligently especially in light of the euro fall and growing prospects for a ECB move. A weak release will consequently weigh on the Eur.
In the UK retails Sales are likely to see some pull back from the elevated Jan release. In fact we could see Jan figure revised down. In light of yesterday's 7-2 votes as reported in the MPC minutes and the growing expectation of a near term cut, the Gbp should stay weak. Especially given the dramatic two day sell off from 2.0270 down to 1.9776.
On the continent markets will be watching flash PMI to provide indication of the extent of the slowing down in economic growth in the eurozone. While feb composite rise was a positive sign the index points to moderation in activity. Markets will be watching diligently especially in light of the euro fall and growing prospects for a ECB move. A weak release will consequently weigh on the Eur.
In the UK retails Sales are likely to see some pull back from the elevated Jan release. In fact we could see Jan figure revised down. In light of yesterday's 7-2 votes as reported in the MPC minutes and the growing expectation of a near term cut, the Gbp should stay weak. Especially given the dramatic two day sell off from 2.0270 down to 1.9776.
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