Global Markets Overview – 3/7/14

Risk assets mostly extended gains overnight, with some positive US economic data and dissipating Russia/Ukraine concerns helping sentiment. The latest on the Crimea front is that it will hold a referendum on 16 March on whether to join the Russian Federation or not. That could be the next talking point as the international community seems to be against this move.

On the data front we had a better-than-expected unemployment claims number (323,000 versus 336,000 expected) while Fed members continued to support tapering. Focus now switches to the non-farm payrolls reading which is due out later today where a strong improvement to 151,000 (from 113,000) is expected.

The ECB decision was perhaps the main event of the overnight session where the central bank decided to remain on hold. With the market mostly positioned for a dovish outcome from the meeting/press conference, the single currency rallied to its highest for the year against the greenback on the news.

Mario Draghi said the region will continue to see a modest recovery and felt they were on track to reach their forecasts. On inflation, Draghi said there will be a prolonged period of low inflation before a gradual pickup. EUR/USD traded as high as 1.387 and is within striking distance of the December 27 high of 1.389.

String of positive releases this week

AUD/USD finally knocked out a barrier in the 0.908 region after having struggled in that region for weeks.

The pair traded as high as 0.9114 after a string of positive local releases encouraged sentiment. Lower interest rates are having a strong impact on household spending with retail sales showing the strongest growth in over four years. Focus now switches to Glenn Stevens testimony before the House Economic Committee at 9.30 AEDT, which has been pinned as the key event of the week for the AUD. Given Tuesday's statement already made an attempt to talk the AUD low, chances are Stevens will be looking to continue with this rhetoric.

Further jawboning could send the AUD lower and see support in the 0.90 region tested again. China will release trade balance and CPI data over the weekend and this along with the non-farm payrolls report will help shape sentiment for Monday.

Flat start for ASX 200

Ahead of the open we are calling the ASX 200 relatively flat at 5447. The barrier at around 5460 has held prices back over the past couple of weeks and we really need a fresh catalyst to catapult us through this level.

With non-farm payrolls due out later today we could see subdued trading in Asia with most investors happy to remain on the sidelines. There isn't much on the company news front today but quite a number of stocks will be trading ex-div including MND, PPT, SWM, BXB and ARI. This might present some downside risk in early trade.

Market	Price at 6:00am AEST	Change Since Australian Market Close	Percentage Change
AUD/USD	0.9089	0.0080	0.89%
USD/JPY	103.1350	0.4100	0.40%
ASX (cash)	5447	2	0.03%
US DOW (cash)	16429	41	0.25%
US S&P (cash)	1877.9	1.1	0.06%
UK FTSE (cash)	6781	-9	-0.13%
German DAX (cash)	9529	-31	-0.33%
Japan 225 (cash)	15314	141	0.93%
Rio Tinto Plc (London)	33.33	0.64	1.94%
BHP Billiton Plc (London)	18.93	0.10	0.53%
BHP Billiton Ltd. ADR (US) (AUD)	37.46	-0.20	-0.52%
US Light Crude Oil (April)	101.96	0.91	0.91%
Gold (spot)	1350.60	13.1	0.98%
Aluminium (London)	1793.00	26	1.45%
Copper (London)	7049.00	25	0.36%
Nickel (London)	15515.0	399	2.64%
Zinc (London)	2110.75	7	0.31%
Iron Ore	116.9	0.2	0.17%