Commodities remained firm in European session, ahead of a number of central bank meetings. Indeed, all of the ECB, the BOE and the BOC are expected to leave the policy rates unchanged in March. However, what matters that most would be the tone delivered in the post-meeting statements as this would unveil policymakers' views on the macroeconomic outlook. Given the dovish tones set in the RBA and the RBNZ statements, we expect the dominants themes would be concerns over the sovereign debt crisis in the Eurozone and a gloomy macroeconomic outlook.
The reason for the robustness of financial markets is investors' optimism over the Greek PSI program. With around 60% of investors signed up for the scheme, the Greek government will not need to adopt the collective action clause. The target of the program is to trim the 206B euro of privately held Greek debt by 53.5%. Yet, the risk of a default in Greece has not be ruled out. The International Institute of Finance (IIF) warned a 'disorderly default in Greece would be about $1.3 trillion. It would also have disastrous impacts on the ECB and other weaker European countries such as Italy, Portugal, Spain and Ireland.
Gold recaptured the 1700-territory as the yellow metal rebounded for a second day. This was mainly driven by a stronger euro. Others in the precious metal complex also hold up well with silver gaining almost 4% after a 3-day decline bring the metal to a 2-month low of 32.49 on Tuesday. PGMs also gained. Apart from the broad-based lift in market sentiment, disruption in mining operations might have sent prices higher. A nation-wide strike in South Africa has affected operations in the country's gold mines. The strike was led by Congress of South African Trade Unions to protest against new road tolls and short-term contract. It's reported that production in Gold Fields and Harmony Gold has been affected. Yet, Anglo American Platinum and Impala Platinum, the world's biggest and the second biggest producers respectively, said they were unaffected.
On the dataflow, the US initial jobless claims probably slipped to 350K in the week ended March 6 from 351K a month ago. The Challenger will also report the rate of job cuts in the world's largest economy. These data would be indicative for the long-awaited US employment report for February (due Friday). Earlier in the day, Australia reported a rise of unemployment rate to 5.2% in February from 5.1% in the prior month. While the result was inline with expectations, the number of payrolls contracted 15.4K during the month, compared with consensus of a 5K gain and the downwardly revised 46.2K addition in January. Deterioration in economic outlook in Australia signaled the RBA would likely ease its monetary policy further later in the year.