Very little activity to report from the Asian session after the US dollar reigned supreme after the FOMC meeting. Currencies were content to consolidate at lower levels versus the greenback, awaiting fresh impetus from the European and US sessions.
Chinese Premier Wen closed off his final National Party Congress today, but had nothing different to report from his speech early last week. He assured that China would intensify reforms of its currency regime and allow the Yuan to float more freely, but then countered with the comment that recent two-way business in the Hong Kong NDF market had suggested that the Yuan was possibly approaching a more balanced level. Note today’s USDCNY fix was fixed 58 points higher at 6.3328 from yesterday, but not surprising given the dollar’s strength overnight.
On the data front, Australian consumer confidence, according to Westpac’s survey, back-tracked all of the previous month’s gains, with losses seen across all components of the index. Longer-term outlooks were also weaker with sentiment falling 2.5 percent for the next 12 months’ outlook and 6.1 percent over the next 5 years. When asked if now was a good time to buy a major household item, positive responses declined 3.8 percent, a disappointing view for the retail sector going forward.
In its quarterly survey of Japan’s large manufacturers, the BSI report showed business conditions and sentiment deteriorating in Q1 with a fall to -7.1 from -6.1. However, the outlook for Q2 was more promising at +2.3, better than previous surveys and corresponding to expectations of a modest economic recovery going into Spring.
The dollar’s recent rally extended overnight with a combination of strong US data, no definitive comments from the Fed on additional QE and as a result an uptick in US yields across the curve assisting the greenback. EUR struggled for traction despite a firm ZEW headline for the EU (+11 versus -8.1) as the USD index rose 0.4 percent and EURUSD slumped to a 1-month low. GBP outperformed on steady EURGBP selling, reportedly linked to corporate dividend payments while a better UK trade balance also helped. USDJPY overcame a mild shakedown post-BOJ and recovered to hit 11-month highs, spurred on by the higher US yields.
On the data front, US retail sales were in line with forecasts, rising 1.1 percent m/m with an upward revision of 0.2 percent to the previous month’s data cementing the improvement while business inventories rose 0.7 percent (last month also adjusted higher) fueling thoughts of a better Q1 GDP performance. The FOMC acknowledged the better data of late and announced a slight upgrade in its description of the economy. There were no hints of further QE measures in the immediate near-term. Wall St had its best day of 2012 with the DJIA rallying 1.68 percent, S&P 1.81 percent and the Nasdaq 1.88 percent led by the financial sector as a stress test “rehearsal” showed most banks passing.
Data Highlights
US Feb. Retail Sales out at +1.1% m/m, as expected vs. revised +0.6% prior
US Feb. Retail Sales ex-Autos/Gas out at +0.6% m/m vs. 0.5% expected and revised +1.0% prior
US Mar. IBD/TIPP Economic Optimism out at 47.5 vs. 50.0 expected and 49.4 prior
US Jan. JOLTs Job Openings out at 3459 vs. 3334 expected and revised 3540 prior
US Jan. Business Inventories out at +0.7% vs. 0.5% expected and revised +0.6% prior
AU Mar. Westpac Consumer Confidence out at -5.0% m/m vs. +4.2% prior
JP Q1 BSI Large Industry Index out at -2.7% q/q vs. -2.5% prior
JP Q1 BSI Large Manufacturing Index out at -7.3% q/q vs. -6.1% prior
AU Q4 Dwelling Starts out at -6.9% q/q vs.-3.0% expected and revised -5.8% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
JP Industrial Production (0430)
JP Capacity Utilization (0430)
JP Machine Tool Orders (0600)
Sweden Unemployment Rate (0900)
UK Claimant Count Rate (0930)
UK Avg. Weekly Earnings (0930)
EU Euro-zone CPI (1000)
EU Euro-zone Industrial Production (1000)
Swiss ZEW Survey (1000)
US MBA Mortgage Applications (1100)
CA Capacity Utilization (1230)
US Import Price Index (1230)
US Current Account Balance (1230)
UK BOE’s Haldane to speak (1245)
Norway Norges Bank Rate Announcement (1300)
US Fed’s Bernanke to speak (1400)
Andrew Robinson,
SAXO BANK