RBA leaves OCR as is at 2%, low inflation leaves scope for easier policy.
Economic Data Ahead
(0830 ET/1330 GMT) Canada's economy is expected to have slowed substantially to 0.0 pct in the fourth quarter after expanding at a rate of 2.3 pct in the third quarter, though it should narrowly avoid another contraction. In December, GDP likely rose 0.1 pct after gaining 0.3 pct in November. Canada was in a mild recession in the first half of 2015 and the country is struggling to regain momentum as the low price of oil takes its toll.
(0930 ET/1430 GMT) The RBC Canadian Manufacturing Purchasing Managers' Index will provide a measure of the manufacturing business conditions in February. The index stood at 49.3 in January.
(0945 ET/1445 GMT) The financial firm Markit releases its manufacturing PMI for February, the index showed a reading of 51.0 in January.
(1000 ET/1500 GMT) The ISM's national manufacturing index likely edged up to 48.5 in February from a reading of 48.2 in January, pointing that the manufacturing downturn is close to bottoming.
(1000 ET/1500 GMT) The U.S. Commerce Department is expected to report construction spending increased 0.4 percent in January after edging up 0.1 percent in December.
(1330 ET/1830 GMT) U.S. Automakers will report February car and light truck sales, which likely rose to a seasonally adjusted pace of about 17.68 million vehicles, up from 16.4 million a year earlier and the highest since 2000 (18.9 million), according to LMC. However, there are worries that the oil price slump could slow demand for trucks and luxury cars in the Southwest and other energy states.
(1630 ET/2130 GMT) API reports Weekly Crude Oil Stocks.
Key Events Ahead
(1145 ET/1645 GMT) Fed Trade 30-year Ginnie Mae max $1.000 bln.
FX Recap
USD: The dollar was buying 112.75 yen, edging up about 0.1 percent, against the basket of currencies it was trading higher 0.11 pct at 98.321. The dollar index has broken major resistance 98.30 and jumped till 98.37. The short term trend is slightly bullish as long as minor support 97.80 holds. The minor support is around 97.80 and break below targets 97.30/97. Any break above 98.30 will take the index to next level 98.60/98.87.
EUR/USD: The euro stayed under pressure against the dollar and the pound after a February reading on euro zone inflation proved weaker than expected. The euro was 0.1 percent lower at $1.0861 after falling to a 4-week low of $1.0859 on Monday. It was trading around 1.08716 at the time of writing. The short term trend is weak as long as resistance 1.09825 holds. Any break above 1.0985 will take the pair till 1.1035/1.1070 in the short term. The minor resistance is at 1.1070 and on the lower side major support is around 1.0850 and any break below 1.0850 will drag it till 1.0825/1.0780. Against the perceived safe-haven yen, the common currency rose 0.2 percent to 122.73, after earlier dropping as low as 122.085 in the Asian session, which was its lowest level since April 2013.
USD/JPY: The yen eased back in early European trading but was still hot to the touch having completed its best month against the dollar since 2008 and reached its highest against the euro since April 2013. It was trading around 113.19 and the short term trend is slightly weak as long as resistance115 holds. On the lower side major support is around 112 and break below targets 110.80/110. The minor resistance is around 115 and break above targets 116/117.50.
GBP/USD: The Sterling dropped against the dollar and trimmed earlier gains against the euro after data showed UK factories suffered their weakest month in almost three years in February as demand at home slowed and exports fell. The Markit/CIPS manufacturing Purchasing Managers' Index (PMI) fell sharply to 50.8 from 52.9 in January. It fell to the day's low of $1.3909 after the numbers were published, down from $1.3945 beforehand, before recovering to $1.3920, flat on the day. The short term trend is still weak as long as resistance 1.4060 holds. On the lower side major support is around 1.3880 and any break below targets 1.3835/1.3800 level. The major resistance is around 1.3980 and break above targets 1.4060//1.4085/1.4195. The short term bearish invalidation is only above 1.4200. Against the euro, the pound weakened to 78.05 pence, from 77.95 pence per euro before the data but leaving it still up 0.1 percent on the day.
USD/CHF: The pair has retreated after making a high of 1.00370 and was trading around 1.0029. The short term trend is slightly bullish as long as support 0.9950 holds. On the higher side any break above 1.0040 will take it till 1.00725/1.01300. The major support is around 0.9950 and break below targets 0.9850/0.9780. The overall bullish invalidation is only below 0.9780.
AUD/USD: The Australian dollar added 0.5 percent against its U.S. counterpart to $0.7175 after the Reserve Bank of Australia left its rates at a record low 2.0 percent. The short term trend is slightly weak as long as resistance 0.7260 holds. On the higher side major resistance is around 0.7260 and break above targets 0.7300/0.7380. The major support is around 0.7100 and break below will drag the pair till 0.7075/0.7020.
Equities Recap
The European shares jumped on Tuesday, as the downbeat Eurozone PMIs strengthened the case for another strong round of stimulus from ECB next week. The Eurozone manufacturing activity recorded its weakest pace in a year last month as deep price discounting failed to put a floor under slowing order growth.
The FTSEurofirst 300 Index rose 0.2 pct, Britain's FTSE 100 climbed 0.6 percent, Germany's DAX jumped 1.3 percent and France's CAC 40 gained 0.4 percent.
Tokyo's Nikkei closed up 0.37 pct at 16,085.51, MSCI's broadest index of Asia-Pacific shares outside Japan closed up 1.3 percent, as Chinese stocks gained 1.8 percent after Monday's easing move from the PBOC. HK's Hang Seng Index ended up 1.6 pct at 19,407.46 points.
Commodities Recap
Oil prices climbed over 1 percent as lower output from U.S. and OPEC might tighten the market and outweighed weak China data. U.S. crude futures were trading at $34.22 per barrel at 0739 GMT, up 47 cents from their last settlement. International benchmark Brent crude futures rose 40 cents at $36.97 per barrel, and up over 20 percent since .
Gold supported by safe-haven demand after weak Chinese data fueled concerns over the global economy, with the volume of assets in the top bullion fund climbing to the highest since 2014. Spot gold gained 0.6 percent to $1,244.90 an ounce by 0647 GMT. U.S. gold futures rose nearly 1 percent to $1,246.
Treasuries Recap
The 10-year U.S. Treasury was offering a 1.73 percent return, down from 1.76 percent on Monday and 1.78 percent late last week.
The Japanese government bond yields were near record lows on Tuesday, pushed down after the market confirmed strong investor demand at a 10-year debt auction, despite negative yields. The benchmark 10-year JGB yield was down 1 basis point at minus 0.075 percent. A fall below that level would take the yield to a new record low. The 30-year yield hit a fresh all-time low of 0.835 percent. The bid-to-cover ratio at Tuesday's 2.4 trillion yen ($21.33 billion) 10-year sale rose to 3.20 from 3.14 at the previous offering in January. The yield on the lowest accepted price was minus 0.015 percent, marking the first time that the yield went below zero at a 10-year auction.
The German 10-year Bund yields were 2 basis points higher on the day at 0.13 percent, having fallen as low as 0.102 percent on Monday. While the other euro zone yields were 1-3 basis points higher. Swiss yields traded at minus 0.50 percent.
UK Gilts opened 12 ticks lower than the settlement of 121.91 as core markets started the month risk on. On the domestic front, though sellers gained an early head of steam with a break of resistance from recent lows on 10-year cash yields at 1.366%. June Gilts were slightly higher at 121.55.
The benchmark Australian government 10-year bond offered a yield of 2.36 per cent, compared with a high of 2.43 percent on Monday and a 12-month peak of 3.14 percent. The current level was last seen in April 2015.
