Research Team at TDS, suggests that the March FAD is shaping up be a placeholder meeting, as TD expects the Bank to remain on the sidelines in anticipation of the upcoming federal budget and fiscal stimulus.

Key Quotes

“Since the January MPR the economy has unfolded largely as expected. However, financial conditions have tightened as the appreciation of the Canadian dollar has outpaced increasing oil prices. There is a risk that the Bank acknowledges the strengthening currency.

TD expects the creation of a mere 5k jobs in February, in line with a slight improvement in hiring intentions. Hiring should be bolstered by a rebound in self-employment, which will help offset continued layoffs in the resource sector. The unemployment rate will hold steady at 7.2% while the six-month pace of hiring will slip from 9k to 6k.”

Research Team at TDS, suggests that the March FAD is shaping up be a placeholder meeting, as TD expects the Bank to remain on the sidelines in anticipation of the upcoming federal budget and fiscal stimulus.

(Market News Provided by FXstreet)

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The shared currency is posting marginal losses vs. the greenback on Monday, taking EUR/USD to meander just below the 1.10 handle.

EUR/USD attention to data, Fed

Lack of volatility and almost no NFP-follow through during the Asian session at the beginning of the week has prompted the pair to consolidate around the critical 1.10 barrier ahead of the opening bell in Euroland.

In the meantime, EMU’s Investor Confidence gauged by the Sentix index is due later, followed by the US Labor Market Conditions Index (LMCI) and speeches by FOMC’s Brainard and Fed’s Fischer.

EUR/USD levels to watch

The pair is now losing 0.09% at 1.0991 and a break below 1.0975 (55-day sma) would expose 1.0916 (100-day sma) and finally 1.0823 (low Mar.2). On the other hand, the next up barrier aligns at 1.1046 (200-day sma) ahead of 1.1056 (20-day sma) and then 1.1071 (high Feb.26).

The shared currency is posting marginal losses vs. the greenback on Monday, taking EUR/USD to meander just below the 1.10 handle…

(Market News Provided by FXstreet)

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Research Team at Goldman Sachs, suggests that in the event that the UK votes to leave the EU on June 23, the long-run economic consequences of Brexit for the UK and the EU are likely to be negative.

Key Quotes

“However, given the substantial unpredictability regarding the UK’s post-Brexit trading and regulatory arrangements, quite how damaging Brexit would be in the long term is subject to a great deal of uncertainty. Arguably of more immediate concern is the effect that the uncertainty itself would have on UK growth.

The EU Treaty sets out a two-year timeframe for departure. During this period, the UK government would have to negotiate the terms upon which it could continue to trade with EU countries and, because each of the UK’s existing trade relationships with non-EU countries is currently conducted via the EU, it would also have to negotiate the terms on which it can continue to trade with the rest of the world. Domestically, the UK government would have to decide upon which of the existing EU regulations and laws – governing everything from product quality to competition rules – it would want to adopt into UK law.

Some of these trade negotiations and many of the regulatory/legal decisions would be relatively straightforward. But many would not. Moreover, given the sheer quantity of deals and rules involved, the process of constructing a new trading, regulatory and legal architecture is likely to take a number of years.

During this period, UK-based businesses would face considerable uncertainty: exporting companies would not know the terms on which they would be able to supply export markets abroad once Brexit is complete; importing companies would not know the terms on which they would be able to import; and all companies would be confronted with increased regulatory/legal uncertainty.

Faced with such uncertainty, the option value for businesses of delaying investment would be high, at least until some clarity is reached. Business investment accounts for around 10% of UK GDP. A collective decision to pause a significant share of this spending would be materially negative for UK output.”

Research Team at Goldman Sachs, suggests that in the event that the UK votes to leave the EU on June 23, the long-run economic consequences of Brexit for the UK and the EU are likely to be negative.

(Market News Provided by FXstreet)

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The GBP/USD pair is trading in the sideways manner above 1.42 levels after rallying for five consecutive sessions. Dollar stays on back footThe US dollar remains on a back foot amid rally in oil prices and due to weak wage growth figures released on Fr…

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Research Team at TDS, notes that the inflation is again negative in the euro area, and likely to stay there for much of 16H1.

Key Quotes

“Consequently, the ECB must act, but the precise composition is still debateable. We expect a 20bps cut to the depo rate, an increase in monthly asset purchases to €70-75bn/mo (and possible extension beyond March 2017), and another LTRO and NLTRO to support market liquidity. With a technical review on the table as well, the possibilities are immense, but hesitation within the Governing Council is sure to lead to at least a little disappointment on some fronts.”

Research Team at TDS, notes that the inflation is again negative in the euro area, and likely to stay there for much of 16H1.

(Market News Provided by FXstreet)

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Elwin de Groot, Senior Eurozone Strategist at Rabobank, suggests that although the Eurozone economy managed to grow 0.3% QoQ in 2015Q4, it is uncertain whether it can maintain that pace into 2016Q1.

Key Quotes

“Meanwhile, the latest HICP print for February was all but terrible, showing an unexpectedly sharp fall in both headline and core inflation. Putting all this in a context of a relatively strong trade-weighted euro (as compared to mid-2015), the broad fall in commodity prices and the inexorable decline in long-term inflation break-evens, it becomes clear that the only option that the ECB does not have at this point is to “give up”. Quite aptly, these were also the closing remarks by Mr. Draghi in the January press conference. Or, in other words, the ECB will have to continue ‘cooking’, like Walt from Breaking Bad.

We also expect the ECB to cut its 2016 inflation projection by at least half a percentage point from 1% in the Dec. projections (possibly with the forecast range signaling deflation risk). The 2017 estimate could also be revised lower from the previous 1.6%. However, the new 2018 estimate is key to gauging whether the ECB thinks that a return to its mandated inflation target is still possible over this horizon. Since the ECB won’t give up, we expect this to be close to the ECB’s target of “close to but below 2%.”

We think it is now beyond any reasonable doubt that the ECB will announce a cut in the deposit rate. Our forecast is for a 10bp cut to -40bp (to be followed by another 10bp cut in the June meeting). Besides a deposit rate cut, we think that an extension/expansion of the liquidity providing measures is a relatively quick win

We believe it will be hard for the ECB to refrain from additional policy measures as a deposit rate cut cum liquidity extension is likely to fall significantly short of market expectations. Moreover, these measures do not really address the problem of sliding inflation expectations. Therefore, we think the ECB will also have to announce an expansion or extention of its PSPP programme. We expect an additional amount of EUR10-20bn in monthly purchases.”

Elwin de Groot, Senior Eurozone Strategist at Rabobank, suggests that although the Eurozone economy managed to grow 0.3% QoQ in 2015Q4, it is uncertain whether it can maintain that pace into 2016Q1.

(Market News Provided by FXstreet)

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EUR / USD Resistance levels (open interest**, contracts) $1.1168 (1584) $1.1127 (3088) $1.1075 (111) Price at time of writing this review: $1.0991 Support levels (open interest**, contracts): $1.0949 (1016) $1.0913 (1621) $1.0865 (21…

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Asian traders reacted to a drop in US oil rig count by sending Brent oil prices above $39/barrel levels, the highest since Dec 11, 2015.

Trades above 100-DMA

Prices are trading above 100-DMA for the first time since July 3, 2015. A Baker Hughes report released in the late NY session on Friday showed the US energy firms cut oil rigs for an 11th week in a row to the lowest level since December 2009.

Furthermore, investors are also focused on the possibility of OPEC and non-OPEC producers signing a production freeze accord at the planned meet on Mar 20th.

Consequently, both benchmarks – WTI and Brent – edged higher by at least 1.5% each.

Brent Technical Levels

Brent futures currently trade around $39.45/barrel. The immediate hurdle is seen at $40 (psychological figure), which if taken out could see prices test supply around $42.19 (Aug 24, 2015 low). On the other hand, a break below immediate support at 38.91 (100-DMA) could see futures drift lower to 36.14 (Jan 29 high).

Asian traders reacted to a drop in US oil rig count by sending Brent oil prices above $39/barrel levels, the highest since Dec 11, 2015.

(Market News Provided by FXstreet)

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The AUD/USD pair extends its corrective side into early Europe and now tests 0.74 handle, as the renewed sell-off in the gold prices weigh down on the Aussie.AUD/USD trades below daily pivotCurrently, the AUD/USD pair drops -0.40% to 0.7408, hovering w…

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