Australia released quite an astounding employment report in the Asian trading day, setting the tone for a better sentiment towards risk which prevailed for the rest of the session.
Australia added some 44.0k jobs in March, beating the consensus median estimates of +6.5k by a large margin, well above even the most optimistic forecasts in the survey, and posting a solid rebound from the -15.4k in February. Jobs were added in both the full-time and part-time sectors with 15.8k full-time and 28.2k part-time making up the totals. The strong job creation saw the unemployment rate unchanged at 5.2 percent despite an increase in the participation rate to 65.4 percent from 65.2 percent. On a quarterly basis, the Australian economy added 27k jobs, the best quarterly performance since Q1 last year.
The strong data naturally revived RBA talk, questioning whether there is a need for additional stimulus. While the RBA has stated that the next CPI release (April 24) will be a key determinant in interest rate policy, a strong labour market cannot go unnoticed. OIS markets are now pricing in a 79 percent chance of a 25bp rate cut at the next meeting, down from 90 percent pre-data. AUD gapped higher and maintained an upward path to hit a 9-day high.
Japan’s wholesale inflation, as measured by the domestic corporate goods prices, perked up in March, accelerating 0.6 percent m/m, double market expectations and firmer than the 0.2 percent increase the previous month. Sadly, the increase came as a result of higher energy prices and the steep fall in the JPY rather than a pickup in domestic demand. Meanwhile, Bank of Japan’s Shirakawa commented that the economy shows signs of picking up, though it remains flat. He emphasized that the BOJ would continue to pursue “powerful” monetary easing. USDJPY was unmoved by the comments.
We heard from Fed’s Yellen early in the session who endorsed the Fed’s current “highly accommodative” policy, as she saw the Fed falling short of achieving its maximum employment objective with inflation seen at or below the Fed’s 2 percent target. Further easing “could be warranted if the recovery proceeds at a slower-than-expected pace, while a significant acceleration in the pace of recovery could call for an earlier beginning to the process of policy firming than the FOMC currently anticipates”, she added. The comments started risk off on a firmer footing as the session got underway.
It was a rather indeterminate session overnight with currency pairs jostled about, but finishing mostly unchanged on the session. Of things Spanish, yields eased back slightly after peaking above 6 percent though Spanish industrial production was the weakest since November 2009. Nevertheless, EURUSD managed to find support and edged marginally higher on the day. GBPUSD also supported and rallied to an eight-day high. CAD remained heavy despite a spike higher in Canadian housing starts.
Data Highlights
CA Mar. Housing Starts out at 215.6k vs. 200.0k expected and revised 205.3k prior
US Mar. Import Price Index out at +1.3% m/m, +3.4% y/y vs. 0.8%/3.4% expected and revised -0.1%/+5.0% prior resp.
US Mar. Budget Statement out at -$198.2 bln vs. -$196.0 bln expected and -$188.2 bln prior
NZ Mar. Business PMI out at 54.5 vs. 57.7 prior
NZ Mar. Credit Card Spending out at -0.2% m/m vs. +0.5% expected and -0.3% prior
JP Mar. M3 Money Stock out at +2.6% y/y vs. 2.5% expected and 2.5% prior
JP Mar. Domestic. Corp. Goods Prices out at +0.6% m/m, +0.69% y/y vs. 0.4% expected for both and 0.2%/0.6% prior resp.
AU Apr. Consumer Inflation Expectation out at 3.3% vs. 2.7% prior
AU Mar. Employment Change out at +44.0k vs. 6.5k expected and -15.4k prior
AU Mar. Unemployment Rate out at 5.2% vs. 5.3% expected and 5.2% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
Sweden CPI (0730)
UK Trade Data (0830)
EU Euro-zone Industrial Production (0900)
US Fed’s Dudley to speak (1215)
CA New House Price Index (1230)
CA Trade Balance (1230)
US PPI (1230)
US Initial Jobless Claims (1230)
US Fed’s Lockhart speaking (1330)
US Bloomberg Consumer Comfort (1345)
US Fed’s Cumming to speak (1400)
US Fed’s Dudley to speak (again) (1500)
US Fed’s Plosser to speak (1630)
US Fed’s Kocherlakota to speak (1700)
UK BOE’s Posen to speak (1800)
Andrew Robinson,
SAXO BANK