Despite it being month-end and the end of the Japanese financial year, activity in the Asian session was relatively subdued. We saw early USDJPY demand into the Tokyo fix but momentum soon ran out and we were quickly back down below 83.0.
On the data front we perhaps saw the first effects of the earthquake/tsunami taking its toll on the economy with Japan’s manufacturing PMI falling below 50 for the first time this year, slumping to 46.4 from 52.9 previously. Australia’s retail sales for February beat forecasts with a 0.5% m/m increase, and private sector credit was higher (suggesting the Ozzie consumer might be feeling a touch more confident about spending) but building approvals were shocking – down 7.4% m/m and 21.8% y/y. However, the market was willing to look through the building approvals and AUDUSD climbed to a new 29-year high, peaking just short of 1.0350 again as the spike faded.
On the data front we perhaps saw the first effects of the earthquake/tsunami taking its toll on the economy with Japan’s manufacturing PMI falling below 50 for the first time this year, slumping to 46.4 from 52.9 previously. Australia’s retail sales for February beat forecasts with a 0.5% m/m increase, and private sector credit was higher (suggesting the Ozzie consumer might be feeling a touch more confident about spending) but building approvals were shocking – down 7.4% m/m and 21.8% y/y. However, the market was willing to look through the building approvals and AUDUSD climbed to a new 29-year high, peaking just short of 1.0350 again as the spike faded.
In other data, New Zealand’s activity outlook and business confidence were disappointing, coming in at 14.7 and -8.7 respectively. NZD was lower on the day but most of the losses were recorded pre-data. U.K. consumer confidence remained mired at low levels while Hometrack house prices recorded the fastest annual pace of decline since October 2009, falling 3.2%.
Overnight, interest rate outlooks continued to be the dominant driver in FX land, with the EUR managing minor gains along with the dollar while the JPY and CHF remained under the thumb. ECB’s Bini Smaghi joined the hawkish train with comments saying rates will be raised in a gradual way first, with the current policy stance deemed not appropriate. GBP was given an initial lift from a firm CBI reported sales survey which came in at +15 rather than the -2 expected and +6 prior but the high-riding dollar and EURGBP buying kept gains limited.
Overnight, interest rate outlooks continued to be the dominant driver in FX land, with the EUR managing minor gains along with the dollar while the JPY and CHF remained under the thumb. ECB’s Bini Smaghi joined the hawkish train with comments saying rates will be raised in a gradual way first, with the current policy stance deemed not appropriate. GBP was given an initial lift from a firm CBI reported sales survey which came in at +15 rather than the -2 expected and +6 prior but the high-riding dollar and EURGBP buying kept gains limited.
On the U.S. data front, Challenger job cuts showed job cuts at the lowest Q1 total for 15 years while the private ADP employment report was a mild disappointment, showing +201k jobs compared with 208k expected and a downward revision of 9k to the previous month’s data. The auction of $29 bln worth of 7-year notes was okay - bid/cover ratio of 2.79 compared with 2.86 last time and a higher yield of 2.895% compared with 2.854% last. Wall St closed slightly higher in a last-minute rush to buy recent gainers – DJIA up 0.58%, S&P +0.67% and the Nasdaq +0.72%.
Looking ahead, today in Europe and we can see German retail sales and unemployment, U.K. Nationwide house prices and Norway retail sales. Expect fixing activity into month-end to pick up later. The North American session features Canada’s GDP numbers for January, weekly US jobless claims (with annual revisions so the numbers may have more impact than normal), Chicago PMI, factory orders and NAPM – Milwaukee.
Economic Data Highlights
- US Weekly Mortgage Applications out at -7.5% vs. +2.7% prior
- US Mar. Challenger Job Cuts out at -38.6% y/y vs. +20.0% prior
- US Mar. ADP Employment Change out at 201k vs. 208k expected and revised 208k prior
- UK Mar GfK Consumer Confidence out at -28 vs. -30 expected and -28 prior
- UK Mar. Hometrack Housing Survey out at -0.1% m/m, -3.2% y/y vs. -0.2%/-2.7% prior resp.
- JP Mar. Nomura/JMMA Manufacturing PMI out at 46.4 vs. 52.9 prior
- AU Feb. Retail Sales out at +0.5% m/m vs. 0.4% expected and 0.4% prior
- AU Feb. Building Approvals out at -7.4% m/m, -21.8% y/y vs. 4.0%/-12.8% expected and revised -11.6%/-16.4% prior resp.
- AU Feb. Private Sector Credit out at +0.5% m/m, 3.4% y/y vs. 0.3%/3.2% expected and 0.3%/3.3% prior resp.
- NZ Mar. NBNZ Activity Outlook out at 14.7 vs. 36.6 prior
- NZ Mar. NBNZ Business Confidence out at -8.7 vs. 34.5 prior
- JP Feb. Housing Starts out at +10.1% y/y vs. 7.4% expected and 2.7% prior
- JP Feb. Construction Orders out at +19.5% y/y vs. -10.7% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
(All Times GMT)
- GE Retail Sales (0600)
- UK Nationwide House Prices (0600)
- GE Unemployment Rate (0755)
- Norway Retail Sales (0800)
- UK BOE Credit Conditions Survey (0830)
- HK Retail Sales (0830)
- EU Euro-zone CPI Estimate (0900)
- UK BOE’s Miles to speak (1015)
- CA Jan. GDP (1230)
- US Initial Jobless Claims (1230)
- US Chicago PMI (1345)
- US Bloomberg Consumer Comfort Index (1345)
- US NAPM – Milwaukee (1400)
- US Factory Orders (1400)
- US Fed’s Lacker to speak (1430)
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