Asian equities trim recent gains ahead of ECB meeting

Thursday, September 04, 2014

Asian indices trimmed recent gains during overnight trading indicating the cautious attitude adopted by investors ahead of the highly anticipated ECB policy meeting. The central bank’s president, Mario Draghi, had hinted at the possibility of further easing measures at last month’s Jackson Hole summit and investors are hoping today’s meeting offers up further dovish comments with the prospect of further stimulus. The tentative outlook prompted a moderate sell-off in benchmark equity indices across the region as Japanese stocks led the move lower. European futures were struggling with a consensus direction during pre-market trading on a combination of hopes for a ceasefire to fighting in Ukraine and the ECB rate decision. 

The dollar index traded towards a thirteen month high yesterday, rallying to an intraday high of 83.058 as bullish US economic data encouraged investors into the greenback. Factory orders accelerated 10.5% in July from the previous month’s 1.5% increase while domestic vehicle sales exceeded expectations by 0.67m as 13.87m auto units were sold on an annualised basis, data for August shows. However, the rally above 83.0 was short-lived as bulls struggled to hold onto higher levels, with the index selling off back towards 82.827 as short term profits were taken. Today’s busy day for US economic data sees the release of ADP employment, initial jobless claims and trade balance data which will all offer investors with further insight into the state of both the labour market and the overall economic health of the US economy.

Plenty of data to keep investors busy today as the major proceedings kicking off in Europe with the BOE and ECB rates decisions, both of which the majority of investors expect to remain unchanged at 0.5% and 0.15% respectively. Attention will then switch to the US session, with the release of ADP employment figures, trade balance data, non-farm productivity and initial weekly jobless claims as well as ISM non-manufacturing data which will keep investors busy throughout the session.     

DXY pares recent gains ahead of employment data

 DXY Curncy DOLLAR INDEX SPOT 2014 09 04 07 32 40

Events for today

0830

DE

Aug

Markit Construction PMI

1200

UK

Sep

BoE Rate

1245

EZ

Sep

ECB Rate

1230

US

Aug

Layoffs

1315

US

Aug

ADP Employment Change

1330

US

Jul

Trade Balance

1330

US

Q2

NF Prod. & Labour Costs

1330

US

w/e

Jobless Claims

1500

US

Aug

ISM Non-Manufacturing

1530

US

w/e

EIA Nat Gas

1600

US

w/e

EIA Energy Stocks

OE: 

Sep  Gasoil (ICE) 

Topics: ECB, BoE, DXY
More from: Kash Kamal