• Reserve Bank of Australia to announce its interest rate decision overnight

  • ISM non-manufacturing index beats estimates but employment data looks worrying

  • Investors are cautious as the launch of trade war seems possible

Monday was quite calm in terms of data release yet it proved to be much more interesting when we take politics into account. In the morning European investors were assessing the outcome of the Italian election as well as the SPD delegates vote. US stocks managed to pare early losses being well in green at press time. GBP remains the strongest currency in G10 following data beat while the Canadian dollar is the weakest one. Gold trades moderately lower while oil surges.

The Reserve Bank of Australia is expected to announce its interest rate decision at 3:30 am BST on 5th of March. The decision will be closely watched by the investors as central bankers found themselves at crossroads taking into consideration recent macro data.

After reaching nearly 60 pts in January the ISM non-manufacturing reading was expected to slide to 59 pts in February. The index in fact showed a decline yet it was smaller than the possible outcome signalled by the economists surveyed by Bloomberg. The reading came in at 59.5 pts therefore one can assume that the condition of the US services sector is still solid.

A current technical view of major European indices became much more vague after the past week which brought the idea of tariffs on imported steel and aluminium declared by US President Donald Trump. Major benchmarks embarked on a new week in dismal moods as well which stemmed from the fallout of the Italian election.

The Dow is down some 2% since the Trump’s tweet on tariffs and over 4% from the local high from the past week. But if history is about to teach us a lesson there could be more in store. Politics will overshadow typical calendar events this week but traders should be vigilant ahead of Bank of Canada, ECB meeting and the NFP release.

The Italian election along with the SPD voting were the major events during the weekend, however, the euro has little responded thus far. In terms of the Italian election the 5Star Movement is expected to win the Sunday’s voting but without a majority needed to form a government on its own.