The first batch of today’s Chinese data held no surprises for the market. CPI came in as expected at +3.4 percent y/y, slightly lower than March’s 3.6 percent. This is the third month in a row it has held below the government’s annual target of 4 percent but food prices continue to rise with food inflation rising 7.0 percent y/y and 0.9 percent m/m. There may be encouraging news from the PPI data which showed a 0.7 percent annual decline, faster than the 0.5 percent forecast and accelerating from the -0.3 percent posted in March.
Timing rescheduling of releases means that the rest of the Chinese data is released just as Europe opens. Industrial production is expected to rise 12.2 percent y/y (though yesterday’s weak imports data may suggest the downside to this estimate is vulnerable) while retail sales are expected to slow marginally to +15.1 percent y/y from +15.2 percent. Fixed asset investment growth is expected to remain steady at +20.5 percent y/y.
In response to the data, currencies held a tight range in Asia with a slight risk-off sentiment apparent throughout. EURUSD had another push through recent lows on stop-loss selling but stalled ahead of 1.29. AUDUSD likewise drifted towards parity but looked comfortable.
In the European and US sessions we had a brief respite from Greek influence as the Bank of England left rates unchanged and, with no adjustments to QE measures, the pound was able to stage a mild rally. US data was mixed with import prices tamer than expected (-0.5 percent m/m, +0.5 percent y/y) while the trade deficit widened to $51.8 bln from $45.4 bln as imports jumped 5.2 percent, the biggest increase in more than a year, on higher demand for oil and consumer goods from China, and more than swamped the better export performance. Weekly jobless claims declined to the lowest levels in a month, falling by 1,000 from the previous month to 367,000. While the May jobs report is still a way off, there are increased expectations that it will be a better number than April.
Data Highlights
CA Mar. Trade Balance out at +CS0.35 bln vs. +C$0.5 bln expected and revised +C$0.27 bln prior
US Apr. Import Price Index out at -0.5% m/m, +0.5% y/y vs. -0.2%/+0.8% expected and revised 1.5%/3.6% prior resp.
US Mar. Trade Balance out at -$51.8 bln vs. -$50.0 bln expected and revised -$45.4 bln prior
US Initial Jobless Claims out at 367k vs. 368k expected and revised 368k prior
US Continuing Claims out at 3229k vs. 3275k expected and revised 3290k prior
US Bloomberg Consumer Comfort Index out at -40.4 vs. -37.6 prior
UK Apr. NIESR GDP Estimate out at +0.1% q/q vs. revised -0.2% prior
US Apr. Monthly Budget out at $59.1 bln vs. $35.0 bln expected and -$40.4 bln prior
NZ Apr. Food Prices out at -0.1% m/m vs. -1.0% prior
UK Apr. Nationwide Consumer Confidence out at 44 vs. 53 prior
China Apr. CPI out at +3.4% y/y, as expected vs. 3.6% prior
China Apr. PPI out at -0.7% y/y vs. -0.5% expected and -0.3% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
China Industrial Production (0530)
China Retail Sales (0530)
China Fixed Asset Investment (0530)
GE CPI (0600)
UK PPI Input/Output (0830)
CA Employment Change/Unemployment Rate (1230)
US PPI (1230)
US Fed’s Fisher to speak (1315)
US Michigan Confidence (1355)
Andrew Robinson,
SAXO BANK