European Open The Kiwi falls UK data and Powell up next

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Risk sentiment took a knock overnight as the US hit China with fresh sanctions. And this only added to NZD’s selling pressure it was already under earlier in the session.

Asian Indices:

  • Australia's ASX 200 index fell by -7.1 points (-0.11%) to close at 6,745.40
  • Japan's Nikkei 225 index has fallen by -26 points (-0.24%) and currently trades at 29,099.06
  • Hong Kong's Hang Seng index has fallen by -367.98 points (-1.27%) and currently trades at 28,517.36

UK and Europe:

  • UK's FTSE 100 futures are currently down -38 points (-0.57%), the cash market is currently estimated to open at 6,688.10
  • Euro STOXX 50 futures are currently down -10 points (-0.27%), the cash market is currently estimated to open at 3,823.84
  • Germany's DAX futures are currently down -43 points (-0.29%), the cash market is currently estimated to open at 14,614.21

Monday US Close:

  • The Dow Jones Industrial rose 103.23 points (0.32%) to close at 32,731.20
  • The S&P 500 index rose 27.49 points (0.71%) to close at 3,940.59
  • The Nasdaq 100 index rose 219.53 points (1.71%) to close at 13,086.51

Indices lower as US impose fresh sanctions on China

Chinese equities were lower overnight as the US, Canada, UK and European Union imposed new sanctions on China in response to the alleged mass detention of Muslim Uighurs. Adding insult to injury, the US also accused China of “mass genocide”.

China’s CSI300 and SSEC indices have fallen -1.4% and -1.2% respectively and the weakest major benchmarks across Asia. Japan’s TOPIX is also lower by -0.65% and the Nikkei 225 is currently down -0.24%.

The DAX touched a 3-day low yesterday but found support at its 10-day eMA before gaining 0.5%. The retracement from its high has not been particularly deep though and futures currently point to a lower open. Still, the daily trend remains bullish above 14,409, even if prices move lower today.

The FTSE 100 printed a bullish hammer above its 50-day eMA, and a break above its high (6732) would also see it back above its 10-day eMA and paint a bullish bias for the session. Whether it can test or break convincingly back above 6800 though is another question. The FTSE is also expected to open lower ahead of UK data at 09:30, and 6650 needs to hold as support to avoid earlier downside potential.


Forex: Traders raced to short the Kiwi dollar overnight

New Zealand are to revive macroprudential policies to take the heat out of the housing market. Traders were quick to jump onto a ‘short Kiwi’ theme and make NZD the weakest major overnight. And perhaps this theme may have some legs, given the large decline in net-long exposure to NZD futures last week.

  • EUR/NZD is today’s strongest pair. It closed above its bearish trendline yesterday (originally flagged in yesterday’s Asian open report) and prices have now risen to a 1-month high towards our 1.7000 target.
  • AUD/NZD broke to its highest level since October 2020.
  • NZD/CAD finally broke beneath 0.8922 support to suggest its bearish trend is set to resume.
  • NZD/JPY was the weakest pair of the session whilst as the yen gained safe-haven flows amidst a weaker equity environment.

As for GBP pairs, traders are waiting for data to hot their terminals at 09:30 today.

  • GBP/USD remains rangebound between 1.3780 and 1.4000. Until we see a break of either level then range-trading strategies may be preferable. As Cable sits in the lower quadrant of this range it could be of interest to bulls if data is stronger than expected today.
  • GBP/JPY produced a bullish pinbar yesterday above the 20-day eMA and closed back above the 38.2% Fibonacci ratio. Whilst it’s trading slightly lower today and remains within the pinbar range, a break above 150.92 assumes bullish continuation. Another contender for a strong data set.
  • GBP/AUD has bounced higher overnight yet remains beneath 1.8000. View today’s chart in the Asia Open report for key levels to watch. We’d like to see a break beneath 1.7814 before assuming bearish continuation.

GBP/CHF is hugging yesterday’s lows ahead of data dump

GBP/CHF remains anchored to yesterday’s low which is near 1.2790 support. We expect this support area to be pivotal around today’s UK data.

We can see prices are coiling into a tight pattern on the four-hour chart around 1.2790, an area which has produced two bullish pinbars and minor rallies. Given momentum has become increasingly bearish and its strong rally turned after failing to hit 1.3000, the bias is for an eventual leg lower (even if prices pop higher after today’s economic data).

Chart analysis of GBP to CHF with a possible cooling. Published in March 2021 by

  • A break of yesterday’s low assumes bearish continuation.
  • Under this scenario bears could use somewhere above the recent consolidation to aid with risk management.
  • If data is strong and prices pop higher then bulls could use yesterday’s lows to aid with risk management.

Commodities: Volatility subsides ahead of Powell testimony

Gold is coiling up within a symmetrical triangle on the four-hour chart. Our bias remains bearish beneath the 1755 high printed last week.

WTI trades around -1% lower as concerns linger about Europe entering another lockdown. Technically, prices have continued to crawl up the inside of a broken trendline and our bias remains bearish below 63.13.

Copper prices remain within a tight range between 4.03 and 4.18. Should price break lower then bears can use the bullish trendline from the October low as a potential downside target. Alternatively, a break above the 4.16 high brings the 4.3750 high back into focus.


Up Next (Times in GMT)

Economic calendar table shows key financial events across the world . Published in March 2021 by StoneX

You can view all the scheduled events for today using our economic calendar, and keep up to date with the latest market news and analysis here.

  • UK data at 09:30 is the main calendar highlight for today, which puts GBP pairs firmly into focus.
  • At 13:00 James Bullard from the Fed talks about the economy to the London School of Economics. He also speaks again virtually at 20:20 for the NABE 2021 conference, in a talk titled “With the Dollar?”.
  • Jerome Powell testifies to congress on coronavirus aid, relief and the Economic Security Act at 16:00.

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