Good morning. Not been the best of starts really for March, just when it looks like its going to get bearish, breaking 6880 yesterday, and looking like it will dip lower, it found decent support on the 10 day Raff at 6860 and bounce back above 6900, where it has remained overnight. The opening climb failed to reach the pivot at 6914, instead stalling at 6910. The S&P fared better off the 2088 support, bouncing back to 2100ish. So still some bulls around. The main thing for today is the ECB press conference at 13:30 where Draghi will unveil specifics for the bond buying program, and we also have, at midday, the UK rate decision.
US & Asia Overnight from Bloomberg
(Bloomberg) — The euro traded at an 11-year low and gold advanced as investors await details of the European Central Bank’s bond-buying program. Chinese shares retreated as Asia’s biggest economy confirmed its weakest growth target in more than 15 years.
The 19-nation euro fell 0.4 percent to $1.1034 by 3:17 p.m. in Tokyo, its lowest level since September 2003. The Bloomberg Dollar Spot Index rose while gold climbed 0.3 percent. Benchmark gauges in Hong Kong and Shanghai dropped at least 1.1 percent, dragging the MSCI Asia Pacific Index down 0.2 percent. Standard & Poor’s 500 Index futures were little changed. Oil in New York traded above $50 a barrel.
With ECB chief Mario Draghi set to unveil specifics of the bank’s 1.1 trillion euro ($1.2 trillion) stimulus plan, Goldman Sachs Group Inc. is forecasting euro parity with the dollar next year. The ECB has already cut deposit rates to below zero. China’s 7 percent 2015 economic growth target underscores a shift away from expansion at all costs as the government seeks to clean up the nation’s environment, reduce graft and control a debt surge.
“The combination of deposit rates negative and QE is a very potent one, so it’s very euro negative,” Robin Brooks, chief currency strategist at Goldman Sachs, said in an interview in Sydney. “We have in our forecasts a very pronounced euro downswing, which is probably the most dollar-bullish forecast in all of our forecasts. We have the euro going to parity by the end of next year and then through parity to 0.9 by the end of 2017.”
Outlooks Diverge
Gold for immediate delivery traded at $1,204.03 an ounce. The euro held declines against most major peers as the ECB prepares to buy 60 billion euros of assets a month to counter slowing growth and the threat of deflation.
Services growth in the euro area fell short of analysts’ estimates last month, in contrast to strong U.S. data, reports showed yesterday. Factory orders numbers from Germany and the U.S. are due today.
New Zealand’s dollar slipped 0.7 percent to 75.37 U.S. cents, while Australia’s currency was little changed at 78.09 U.S. cents. A stronger Aussie and lower interest rates than the economy would normally warrant are unavoidable in an environment of international policy easing, central bank Deputy Governor Philip Lowe said.
Dollar Index
The Bloomberg gauge that tracks the dollar against its 10 most-traded peers climbed 0.2 percent, extending gains from Wednesday after data showed U.S. service businesses expanded and companies added more than 200,000 jobs for a 13th straight month. The U.S. currency was stronger against most peers.
China will strengthen supervision in shadow banking, according to a work report from the National Development and Reform Commission also released Thursday. It will aim to keep the urban unemployment rate under 4.5 percent, expand M2 money supply by about 12 percent, and target trade growth of about 6 percent this year, it said.
“The lower target reflects the desire to reduce additional leverage in the economy,” said Dariusz Kowalczyk, an economist at Credit Agricole CIB in Hong Kong. “The 2015 targets point to determination to push through with structural reforms even at the expense of somewhat slower growth.”
The Shanghai Composite Index, the world’s best-performing benchmark gauge in 2014, slipped 1.7 percent, while the Hang Seng Composite Index slipped 1.4 percent in Hong Kong, taking its decline through the last three days to 5 percent. The Hang Seng Index retreated 1.1 percent and the S&P/ASX 200 Index pared loses to trade little changed in Sydney.
MSCI’s Asia-Pacific gauge that includes Japanese shares was 0.1 percent weaker as gains in the Topix index offset losses in most other regional markets.
Oil Gains
All but one of 10 industry groups dropped in the S&P 500 Wednesday as industrial companies tumbled 0.8 percent and energy stocks lost 0.2 percent. Health-care shares were the only group in the benchmark to advance, gaining 0.4 percent.
West Texas Intermediate crude traded at $51.74 a barrel in New York, a third day of gains. Stockpiles at Cushing, Oklahoma, the delivery point for West Texas Intermediate, expanded by 536,000 barrels through Feb. 27, according to the Energy Information Administration. Prior to that, supplies at the hub had grown by more than 1 million barrels each week this year.
Brent futures, the benchmark contract for more than half of world oil, were little changed at $60.61 a barrel in London. Seadrill Ltd., the offshore oil driller controlled by billionaire John Fredriksen, said the rig market is unlikely to recover for at least two years after the price slump cut demand for services. [ref]
FTSE Outlook
There is still some bull around, with that rise from the 6860 area yesterday, and the S&P climbing from 2088. We are back within the Bianca channels, with support at 6901 and 6888 for today from them. We also have the pivot at 6900, so I wouldn’t be surprised if we have an early morning rise before a drop back later on. The 30min EMAs are currently bullish, having changed over at the closing bell last night. Assuming that he 6900ish area holds then we have resistance at 6935 first, then 6945 and 6960 – the most recent high. The 6935 looks like decent resistance to start with so I will venture a short there. If the bears break below the 6888 then the Raffs will come into play with the 20 day supporting at 6867 and the 10 day at 6857. If these break then yesterdays 6831 is still valid, with 6790 below that. Will be a news driven day with the ECB later on so bear that in mind.