Economic Data Highlights
- New Zealand Jan. Credit Card Spending rose 2.6% YoY vs. 1.0% in Dec.
- Germany Jan. Producer Prices rose +0.8% MoM and fell-3.4% YoY vs. +0.3/-4.0% expected, respectively
- Germany Feb. preliminary Manufacturing PMI out at 57.1 vs. 53.8 expected and 53.7 in Jan.
- Germany Feb. preliminary Services PMI out at 51.7 vs. 52.4 expected and 52.2 in Jan.
- EuroZone Dec. Current Account out at 1.9B vs. -0.5B in Nov.
- EuroZone Feb. preliminary Manufacturing PMI out at 54.1 vs. 52.7 expected and 52.4 in Jan.
- EuroZone Feb. preliminary Services PMI out at 52.0 vs. 52.5 expected and 52.5 in Jan.
- UK Jan. Retail Sales out at -1.2% MoM and +2.6% YoY vs. -0.5/+1.1% expected, respectively
- Canada Jan. Leading Indicators out at +0.9% vs. 1.1% expected and 1.5% in Dec.
- Canada Dec. Retail Sales out at +0.4% MoM vs. +0.5% expected
- Canada Dec. Retail Sales less Autos out at +0.4% vs. +0.3% expected
- US Jan. CPI out at +0.2% MoM and +2.6% YoY, vs. +0.3/+2.8% expected, respectively, and vs. +2.7% YoY in Dec.
- US Jan. CPI ex Food and Energy out at -0.1% MoM and +1.6% YoY vs. +0.1/+1.8% expected, respectively and vs. +1.8% YoY in Dec.
Upcoming Economic Calendar Highlights
- US Fed's Pianalto to Speak (Sat 1700)
- Australia Jan. New Motor Vehicle Sales (Mon 0030)
- Japan Jan. Supermarket Sales (Mon 0500)
Today's market is all about the aftermath of the Fed's decision to hike the discount rate and "what it all means". Risk has recovered fairly well overnight after equity futures were off heavily after the market close yesterday, but interest rates have maintained a higher level. The USD performance is somewhere between these extremes, still stronger than it was at this time yesterday, but well of its highs overnight. If bonds continue to sell off and risk appetite breaks through the lines in the sand, then the JPY is likely to be the chief sufferer.
EUR and GBP
One of the more interesting developments in the wake of the Fed decision was a rather sharp sell-of in GBP, a result, perhaps of the market's recent unwinding of BoE policy expectations relative to the sudden perception that the Fed is moving forward more quickly than anticipated. GBPUSD is trading at new lows since last May. Then today, better than expected PMI data from the EuroZone and an ugly UK Retail Sales number (big grain of salt required with the official UK Retail Sales survey, it has shown poor correlation with other surveys) saw the single currency finally putting up a fight against the pound. We wonder if the broad Euro weakness is in need of some consolidation (would look for this in EURAUD and EURNZD if risk continues to look nervous after the Fed's decision to move on rates.)
One of the more interesting developments in the wake of the Fed decision was a rather sharp sell-of in GBP, a result, perhaps of the market's recent unwinding of BoE policy expectations relative to the sudden perception that the Fed is moving forward more quickly than anticipated. GBPUSD is trading at new lows since last May. Then today, better than expected PMI data from the EuroZone and an ugly UK Retail Sales number (big grain of salt required with the official UK Retail Sales survey, it has shown poor correlation with other surveys) saw the single currency finally putting up a fight against the pound. We wonder if the broad Euro weakness is in need of some consolidation (would look for this in EURAUD and EURNZD if risk continues to look nervous after the Fed's decision to move on rates.)
Chart: EURGBP
Interesting move here in EURGBP higher after the Fed's move on the discount rate late yesterday. The obvious technical key here is the 200-day moving average, which has been absolutely critical in this pair's history.
Interesting move here in EURGBP higher after the Fed's move on the discount rate late yesterday. The obvious technical key here is the 200-day moving average, which has been absolutely critical in this pair's history.
Chart: EUR and Greek spreads
If we are to believe that the weak Euro is only about Greek woes, then there is reason to suspect that the Euro is getting a bit overdone on the down side on a broader basis if Greek debt spreads are a measure of the situation.
If we are to believe that the weak Euro is only about Greek woes, then there is reason to suspect that the Euro is getting a bit overdone on the down side on a broader basis if Greek debt spreads are a measure of the situation.
US Core CPI - lowest reading in a generation...
The US CPI release today is almost comical as the core reading came in below expectations and actually in negative territory (one wonders if the Fed knew the number before hand?) on a month on month basis for the first time since 1982.There was a brief attempt by the market to consolidate the sell-off in fixed income and rally in the USD, but this had faded somewhat by the time of this writing. Last night, the Fed's Bullard tried to downplay the significance of the move in the discount rate and said that expectations for rate hikes ahead of the end of this year are "overblown", but the market decided to makes its move despite this rhetoric and interest rates remain elevated. Can we make this situation any more confusing, Fed governors? It's like the Fed is at a bodybuilding competition - wanting to show off its muscles, but not actually threatening to employ them for anything...
The US CPI release today is almost comical as the core reading came in below expectations and actually in negative territory (one wonders if the Fed knew the number before hand?) on a month on month basis for the first time since 1982.There was a brief attempt by the market to consolidate the sell-off in fixed income and rally in the USD, but this had faded somewhat by the time of this writing. Last night, the Fed's Bullard tried to downplay the significance of the move in the discount rate and said that expectations for rate hikes ahead of the end of this year are "overblown", but the market decided to makes its move despite this rhetoric and interest rates remain elevated. Can we make this situation any more confusing, Fed governors? It's like the Fed is at a bodybuilding competition - wanting to show off its muscles, but not actually threatening to employ them for anything...
Looking ahead
No more data to end the week here after the US inflation data earlier. Again, the main interest here is if the Fed's move on the discount rate triggers a further consolidation in risk (that cross market barometer we have been following, the 55-day moving average in the US S&P500 around 1008 was in play yesterday and remains so today). Ahead of the US equity open, the market seems to want to brush the news aside, but lets see how things settle by the end of the day.
No more data to end the week here after the US inflation data earlier. Again, the main interest here is if the Fed's move on the discount rate triggers a further consolidation in risk (that cross market barometer we have been following, the 55-day moving average in the US S&P500 around 1008 was in play yesterday and remains so today). Ahead of the US equity open, the market seems to want to brush the news aside, but lets see how things settle by the end of the day.
Next Week's Economic Data Highlights
Next week, we have a fairly quiet week on the data front - but what could be an interesting week for Fed and BoE .Below are just a few selected highlights. See the Economic Calendar, as always, for a more complete list
Next week, we have a fairly quiet week on the data front - but what could be an interesting week for Fed and BoE .Below are just a few selected highlights. See the Economic Calendar, as always, for a more complete list
Tuesday
- Germany Feb IFO - can the Germans make it 11 rises in a row?
- Bank of England testimony - from King and his posse. Another chance to explain their stance
- US Consumer Confidence - has been flat-lining at low levels for months - any reason to expect a change? The Present Situation component recently notched a record low....
Wednesday
- Bernanke testimony - this testimony was published some time back, but he could not deliver it due to poor weather at the capital. So it will be all about the question and answer session with lawmakers
Friday
- US Feb. Chicago PMI - looking for a hat-trick of positive regional manufacturing surveys after strong Empire and Philly numbers
- US University of Michigan Confidence - has shown a more positive trend than the Conference Board monthly reading or the ABC weekly readings
Have a great weekend!
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