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    Asian Session – Dollar attempts rebound following employment report losses

    The US dollar was trying to claw back some of the losses it registered on Friday, after weak wage growth and hours worked data pointed to little urgency for the Fed to hike rates in its meeting next week.  The dollar pushed the euro back below 1.10 around 1.0970, as the pair traded as high as 1.1042 on Friday.  Investors and traders were eagerly awaiting this week’s ECB meeting, where additional stimulus is expected for the Eurozone.  Whether the ECB will meet, exceed or undershoot expectations is the big question that will determine trading in euro-related crosses in the coming days and in the meeting’s aftermath.

    German factory orders for January came in better-than-expected at -0.1% month-on-month compared to expectations of a -0.3% monthly drop.  It appears that weak domestic demand was compensated by strength in orders from Germany’s Eurozone partners.  The euro failed to react to the positive data.

    In other news, there was some profit-taking in the Australian dollar after it managed to overrun the 74 cents level against the US dollar on Friday.  Having reached as high as 0.7442 on Friday, the pair traded closer to the 74 cent level at 0.7405.  An Australian construction index for February fell slightly and also the news from China’s National People’s Congress concerning the goals for the world’s second largest economy for the next five years failed to excite.  China would aim for GDP growth rates of 6.5-7% for the next 5 years, while the budget deficit would remain relatively low at 3% of GDP.  Some analysts were hoping for even more fiscal stimulus and a bigger deficit target.  Chinese stocks were up slightly during Monday’s trading.

    One factor that was underpinning risk sentiment was strength in oil prices.  The price of oil was trading north of $36 a barrel; its highest since early January.

    The remainder of the day is likely to be relatively quiet as markets prepare for the key ECB meeting on Thursday, but also the Reserve Bank of New Zealand and the Bank of Canada meetings before that.  Eurozone sentix investor sentiment for March will come out at 0930 GMT, while later in the US session, Labour market conditions index for February, speeches from Federal Reserve officials Brainard and Fischer and finally Consumer Credit for January will be watched.

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