There was not much to report for the Asian session today as the EUR consolidated following the strong rebound seen overnight.
The only item on the data agenda was Singapore’s export figures for January and, like those seen for China, they generally disappointed. Like China, the Singapore economy was also affected by the Lunar New Year celebrations and it would be easy to attribute the 2.1 percent y/y decline in non-oil domestic exports to the shorter work month but the weaker global economic outlook may suggest the weakness is not a one-of. This will make next month’s data that much more important. In a continuing trend, electronics exports were dismal falling 10.9 percent y/y, faster than the revised 4.2 percent fall in December. The Singapore budget for 2012 will be revealed later today and it will be interesting to see if any specific measures for the export sector are mentioned.
The release of January’s minutes of the bank of Japan meeting were a sideshow considering the latest decision on easing made at the February 14 meeting. January minutes showed only one member suggesting an increase in the asset buying scheme be considered while many thought the JPY’s strength was persisting due to the deteriorating European situation and the monetary easing seen in other economies. Short-term inflation expectations at a number of companies and households had declined slightly, they commented and a government representative hoped the bank of Japan would take decisive action to beat deflation through steps to achieve 1 percent inflation. Fast forward one month and that’s what we got.
The EUR appeared to be pinned to the 1.30 mark versus the dollar for most of the overnight session until hopes were lifted that a Greek deal was imminent as details emerged of the latest discussions and the timing of its implementation became clearer. That was enough to pull EURUSD up from below 1.30, its lowest level since January 25, encouraging a 1-1/2 big figure up-move.
Riskier currencies were given an additional boost with a string of relatively firm US data points. Weekly jobless claims fell below 350k for the first time since March 2008, printing 348k from an upwardly-revised 361k last week. The housing sector continued its recent good run of positive data with housing starts rising 1.5 percent m/m (-3.4 percent expected) and building permits up 0.7 percent m/m (0.6 percent expected). The weekly Bloomberg consumer comfort index jumped to its highest level since end-February last year (-39.7) and economic expectations improved to -7 from -19 and finally the second of the regional manufacturing surveys, the Philadelphia Fed index, showed manufacturing expanding at its fastest pace in four months and rising to 10.2 from 7.3 as orders and sales picked up. All told, a strong set of data points and this helped the risk currency and Wall St rally.
Data Highlights
US Jan. PPI out at +0.1% m/m, +4.1% y/y vs. 0.4%/4.1% expected and -0.1%/4.8% prior resp.
US Initial Jobless Claims out at 348k vs. 365k expected and revised 361k prior
US Continuing Claims out at 3426k vs. 3495k expected and revised 3526k prior
US Jan. Housing Starts out at +1.5% m/m vs. -3.4% expected and revised -1.9% prior
US Jan. Building Permits out at +0.7% m/m vs. 0.6% expected and revised -1.3% prior
US Bloomberg Consumer Comfort Index out at -39.8 vs. -42.0 expected and -41.7 prior
US Feb. Bloomberg Economic Expectations out at -7 vs. -19 prior
US Feb. Philadelphia Fed Index out at 10.2 vs. 9.0 expected and 7.3 prior
SI Jan. Non-oil Domestic Exports out at -2.1% y/y vs. -1.6% expected and +9.0% prior
Upcoming Economic Calendar Highlights (All Times GMT)
GE PPI (0700)
EU Euro-zone Current Account Balance (0900)
UK Retail Sales (0930)
EU Euro-zone Construction Output (1000)
CA CPI (1200)
EU ECB’s Knot to speak (1230)
CA Leading Indicators (1330)
US CPI (1330)
US Leading Indicators (1500)
UK BOE’s Posen to speak (1900)
Andrew Robinson,
SAXO BANK