The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The China A50 index will be at the heart of the markets today with the National People’s Congress (NPC) in play. Reports are that we will hear from Premier Li Keqiang, Finance Minister Lou Jiwei and NDRC chairman Xu Shaoshi (all reported to speak at 10:30 AEDT). There are a number of reforms expected to be ratified around anti-pollution measures, higher dividends for SEO’s (state-owned enterprises) among others, however from a markets perspective traders are keen to see whether there is a change to China’s growth target. I feel there will be no change to their target of ‘about 7.5%’ and while this seems positive on the surface, there is also a negative of keeping the target here. Some are also looking for a widening of the 1% trading band for the CNY.
The pair seems to be unable to pull below the 50-day moving average at 0.8912, while the buyers come in time and time again to see the pair close above the 38.2% retracement of the January to February rally at 0.8920. On the upside there is short-term resistance drawn from the February 24 high and we will need to see a strong Q4 GDP print today (at 11:30 AEDT) for a break of this level. Consensus is for growth of around 2.5% on the year and 0.7% on the quarter, although this read is a backwards looking indicator and an in-line read should cause little reaction in the AUD. Keep an eye on China today with the National Party Congress likely to keep traders active.
The pair is trading a range and continues to find sellers on rallies to the longer term downtrend around 1.3830. There’s plenty here on both the EUR and USD side of the equation today, with services PMI from a number of European countries, while Q4 GDP is also due for release and shouldn’t be revised from the prior rate of 0.5% (yoy). On the other side we get US ADP private payrolls and services PMI; both are expected to slowdown from last month.
We heard from the RBA yesterday and will hear from the BoE and ECB tomorrow, however tonight (02:00 AEDT) we get Canada’s central bank meeting. The chances are we will get a fairly neutral statement, although we have heard a few speeches of late where Canadian officials have talked down the CAD.
It should be a ‘risk-on’ day in Asia, with comments from Vladimir Putin highlighting that Russia are in no rush to get into conflict. Europe and US leads have been very strong and clearly the market see’s the situation between Ukraine and Russia as more a standoff than conflict. China should take central focus.