The end of the week and currencies barely changed from the kick-off on Monday was enough of an incentive for Asia to kick its heels today. Data releases were minor and currencies stuck to tight ranges.
On the data front, Japan’s tertiary industry index (essentially the services index) was a mild disappointment with a flat reading in February. This was a slight improvement from the upwardly-revised -0.6 percent in January but below market consensus of a +0.7 percent reading.
The high AUD continued to have an impact on Australia’s terms of trade in the first quarter of the year. Export prices fell by a disturbing 7 percent q/q, a sharp fall from the -1.5 percent recorded in the last quarter and worse than the -3.0 percent consensus. On the other side of the equation import prices fell a measured 1.2 percent q/q with higher oil prices countering lower prices as a result of the high-flying currency. At its last meeting the RBA commented that the high AUD was not affecting the country’s terms of trade to a great extent, but the quarter’s sharp decline in export prices could change that.
Currencies were generally held in tight ranges again overnight though with some choppy moves in between. EURUSD’s early bull-run was cut short after France downgrade rumours circulated (subsequently unfounded). The Spanish debt auction went well but yields were higher than last time and Moody’s stated that the possibility of Spain’s failure remains high if 10-year yields stay above 5.7 percent. Later comments from ECB officials suggesting the market should not expect further special easing measures put a floor under the pair. Weak data saw commodities suffer and CAD lost some of yesterday’s sparkle as a result.
GBP continued to push higher, hitting a 5-month high versus the US on shifting perception on further BOE QE measures. Adam Posen, the previous arch-dove, was speaking last night and, justifying his changed stance, thought the UK economy was stronger than next week’s Q1 data may suggest with a “very odd” performance by the construction sector dragging headline numbers lower. In addition, core inflation is proving too resilient for his liking, but the general view of the MPC was that headline inflation would be down to target by the end of the year.
US data releases were generally below consensus adding to a risk-off mood. Jobless claims rose to 386k (and previous week revised higher), the Philly Fed survey eased back to 8.5 from 12.5 last and existing home sales fell 2.6 percent m/m after a revised 0.6 percent fall in February. Minor bright spots included another marginal improvement in the weekly Bloomberg consumer comfort index to -31.4 from -32.8 and a better-than-forecast leading indicator reading of +0.3 percent (though slowing from the previous month’s +0.7 percent). From Europe a late flash Euro-zone consumer confidence index slid to -19.8 from -19.1.
Data Highlights
US Initial Jobless Claims out at 386k vs. 370k expected and revised 388k prior
US Continuing Claims out at 3297k vs. 3300k expected and revised 3271k prior
US Bloomberg Consumer Comfort Index out at -31.4 vs. -32.8 prior
US Apr. Bloomberg Economic Expectations Index out at -3 vs. +1 prior
EU Apr. Euro-zone Consumer Confidence out at -19.8 vs. -19.0 expected and -19.1 prior
US Apr. Philly Fed Index out at 8.5 vs. 12.0 expected and 12.5 prior
US Mar. Existing Home Sales out at -2.6% m/m vs. +0.5% expected and revised -0.6% prior
US Mar. Leading Indicators out at +0.3% vs. 0.2% expected and 0.7% prior
JP Feb. Tertiary Industry Index out at flat m/m vs. +0.7% expected and revised -0.6% prior
AU Q1 Export Price Index out at -7.0% q/q vs. -3.0% expected and -1.5% prior
AU Q1 Import Price Index out at -1.2% q/q vs. -0.1% expected and +2.5% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
GE Producer Prices (0600)
JP Convenience Store Sales (0700)
GE IFO Surveys (0800)
Norway Existing Home Prices (0800)
UK Retail Sales (0830)
CA Leading Indicators (1230)
CA CPI (1230)
US G20 Meeting (ongoing)
Andrew Robinson,
SAXO BANK