With the Greek deal supposedly done and dusted, markets now have to find something else to focus on near-term and, judging by the ranges, inspiration is in short supply.
Having closed the US session mid-range, EUR stuck within tight parameters during the Asian session. A mixed Wall St close gave little direction for the risk on/risk off sentiment and both equities and currencies were calm, albeit with a mildly negative mood.
The highlight on the Asian data front was the release of China flash manufacturing PMI estimates for February from HSBC, which showed a slight improvement from January’s Lunar New Year-affected data. The index rose to 49.7 but it still marked the fourth month in a row it stayed below the key 50 contraction/expansion threshold. Note we still have distortions from the timing of the Lunar New year celebrations and the survey was taken before last weekend’s reserve ratio requirement cut. Nevertheless, a very uncertain external situation and stuttering domestic demand will likely mean we struggle to breach to 50 mark convincingly in the near-term. Also note the official data for January was more optimistic than the HSBC equivalent with a 50.5 reading versus 48.8.
EURUSD, like most pairs, traded a relatively tightEurope/US range Tuesday given the lack of news and failed to make further headway above post-announcement highs seen in Asia. Some market chatter that the ECB is hoping that the upcoming LTRO at the end of the month will be the last helped keep the single currency in check but a slight improvement in Euro-zone consumer confidence (released late in the NY session) ensured we finished the day mid-range.
Data releases from North America were broadly in line with forecasts with Canada’s retail sales falling 0.2% m/m and wholesale sales rising 0.9% m/m. From the US, the Chicago Fed activity index came in slightly above forecast at +0.22 though with a hefty upward revision to the previous month’s data (to +0.54 from +0.17). Wall St ended mixed after an early rally ran out of steam once the DJIA had touched above the 13,000 mark for the first time since May 2008.
Data Highlights
CA Dec. Retail Sales out at -0.2% m/m, as expected vs. revised +0.4% prior
CA Dec. Wholesale Sales out at +0.9% m/m vs. 0.6% expected and revised -0.3% prior
US Jan. Chicago Fed Activity Index out at 0.22 vs. 0.21 expected and revised 0.54 prior
EU Feb. Euro-zone Consumer Confidence out at -20.2 vs. -20.1 expected and -20.7 prior
AU Dec. Conference Board Leading Index out at +0.2% vs. -0.3% prior
AU Dec. Westpac Leading Index out at +0.5% m/m vs. revised -0.1% prior
AU Jan. DEWR Internet Vacancies out at -0.6% vs. revised -0.7% prior
AU Q4 Wage Cost Index out at +1.0% q/q, +3.6% y/y vs. 0.8%/3.4% expected and 0.7%/3.6% prior resp.
China Feb. Flash HSBC Manufacturing PMI out at 49.7 vs. 48.8 prior
Upcoming Economic Calendar Highlights (All Times GMT)
JP Supermarket Sales (0500)
GE PMI Manufacturing (0830)
GE PMI Services (0830)
Sweden Unemployment Rate (0830)
EU PMI Manufacturing/Services/Composite (0900)
Norway Unemployment Rate (0900)
UK BOE Minutes (0930)
EU Industrial New Orders (1000)
US MBA Mortgage Applications (1200)
US Existing Home Sales (1500)
Andrew Robinson,
SAXO BANK