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It was a busy start to the week for Asian session traders, as they continued to price in Trump’s tariff decisions AND political developments in the euro region over the weekend.

But though the euro and the Greenback got considerable interest, traders were more interested in adjusting their positions on the Aussie and the Kiwi. What’s up with that?!

  • Euro boosted by SPD support for Merkel, but retraces on Italy’s hung Parliament election results
  • Asian markets weighed by Trump’s new tariffs
  • New Zealand’s ANX commodity prices up by 2.8% vs. 0.7% previous
  • Australia’s AIG services index dips from 54.9 to 54.0 in February
  • Australia’s MI inflation gauge shows 0.1% decline vs. 0.3% increase in January
  • Australia’s building approvals rocket by 17.1% vs. 5.1% expected, 20.6% decline in December
  • Australia’s company operating profits (q/q) up by 2.2% vs. 1.6% expected, -0.1% previous
  • Australia’s ANZ job ads decrease by 0.3% vs. 6.2% gain in January
  • Chinese Caixin services PMI slips from 54.7 to 54.2 vs. 54.3 expected

Major Events/Reports:

Australia’s data dump

Reports printed from the Land Down Under came in mixed earlier today.

Building approvals rose by a whopping 17.1% in February when market players had only expected a 5.1% increase. Company operating profits also popped up by 2.2%, and showed a solid 1.0% gain in its wages and salaries component.

What caused some concern for investors are the misses in other releases. AIG’s services survey, for example, slowed from 54.9 to 54.0 in February. Job ads also fell by 0.3% after seeing 6.2% improvement in January. Last but not the least, MI’s inflation gauge printed a 0.1% decrease after rising by 0.3% in January.

Overall the numbers were just a tad too inconvenient (and a perfect excuse to dump their Aussie exposure) ahead of the GDP release AND RBA’s monetary policy statement.

Political brouhaha in Europe

Over the weekend about 66.02% of eligible Social Democratic party (SPD) members voted in favor of forming a “grand coalition” government with Angela Merkel’s Christian Democratic Union (CDU), a move that secures Merkel’s fourth term in power in Germany.

The decision came after months of uncertainty in the region. It’s not without its challenges, however. For one, far-right Alternative für Deutschland (AfD) is now the biggest opposition party in parliament, and could challenge Merkel’s leadership in the coming months.

All is not as well in Italy. Elections were held over the weekend and, not only are the Italians favoring populist, anti-establishment parties, but latest numbers also put the possibility of a hung parliament on the table. Duhn duhn duhn.

Bloodbath for equities, a bit of recovery for commodities

Asian session traders caught up to their U.S. counterparts and continued to price in the possible risks of Trump doubling down on his decision to impose higher tariffs on steel and aluminum imports.

For newbies out there, you should know that the tariffs would not only force some companies to pass on their higher costs to consumers, but they also run the risk of other countries upping their protectionist game and inspire a global trade war where nobody wins.

  • Nikkei is down by 0.56% to 21,062.9;
  • Australia’s A SX 200 is down by 0.44% to 5,892.8;
  • Shanghai index is down by 0.16% to 3,249.215, and
  • Hang Seng is down by 1.13% to 30,238.7.

Commodity prices didn’t join the bearish party, however.

  • Gold is up by 0.33% to $1,326.62;
  • Brent crude oil is up by 0.25% to $64.66, and
  • U.S. WTI is up by 0.18% to $61.54.

Major Market Mover(s):

The New Zealand dollar was the biggest loser across the board thanks to speculations that this week’s dairy auction would result to lower milk prices, which will then drag the Kiwi lower.

NZD/JPY is down by 29 pips (-0.37%) to 76.24
NZD/USD is down by 18 pips (-0.24%) to .7222;
EUR/NZD is up by 55 pips (+0.32%) to 1.7058, and
AUD/NZD is up by 16 pips (+0.15%) to 1.0731.

Whether it’s residual reaction from Trump’s tariffs, risk aversion, or positioning ahead of the RBA’s decision, the Aussie took second place as the biggest loser in the gang.

AUD/USD is down by 10 pips (-0.13%) to .7750;
AUD/JPY is down by 23 pips (-0.28%) to 81.81;
EUR/AUD is up by 33 pips (+0.21%) to 1.5895, and
GBP/AUD is up by 25 pips (+0.14%) to 1.7790.

Watch Out For:

  • 8:15 am GMT: Spain’s services PMI (56.5 expected, 56.9 previous)
  • 8:45 am GMT: Italy’s services PMI (57.3 expected, 57.7 previous)
  • 8:40 am GMT: France’s final services PMI to remain at 57.9?
  • 8:55 am GMT: No changes expected from Germany’s final services PMI
  • 9:00 am GMT: Euro Zone’s final services PMI to remain at 56.7?
  • 9:30 am GMT: Euro Zone Sentix investor confidence (31.1 expected, 31.9 previous)
  • 9:30 am GMT: U.K.’s services PMI (53.3 expected, 53.0 previous)
  • 10:00 am GMT: Euro Zone retail sales (0.3% expected, -1.1% previous)