Market Roundup
- BoJ DepGov Iwata: Hard to achieve 2% CPI target strictly in 2 years but deflation end in sight, real wages rising, recovery likely gradual.
- RBA FSR: Standards must be maintained, commercial property risks up, foreign demand, global search for yield keeping prices up, system strong, stress low.
- Japan Feb corporate services price index +0.1% m/m, +3.3% y/y at 102.5, Jan revised -0.4% m/m, excluding tax hike CSPI +0.6% y/y, Jan +0.8%.
- New Zealand Feb trade surplus NZ$50 mln, annual deficit NZ$2.18 bln, NZ$392 mln and NZ$1.82 bln expected, imports NZ$3.87 bln, exports NZ$3.92 bln.
- New Zealand Fonterra H1 earnings slide on margin squeeze, supply forecast revised upwards, CEO Spierings sees geopolitical issues keeping diary prices volatile.
Economic Data Ahead
- (0300 EDT/0700GMT) Switzerland Feb UBS consumption indicator; previous 1.24.
- (0345 EDT/0745 GMT) France Mar business climate index, 99.0 consensus; previous 99.0.
- (0400 EDT/0800GMT) Sweden Mar manufacturing confidence index, 106.7 consensus; previous 106.8.
- (0400 EDT/0800GMT) Sweden Mar consumer confidence index, 98.0 consensus; previous 97.4.
- (0500 EDT/0900GMT) Germany Mar Ifo business climate index, 107.3 consensus; previous 106.8.
- (0500 EDT/0900GMT) Germany Mar Ifo current conditions index, 112.0 consensus; previous 111.3.
- (0500 EDT/0900GMT) Germany Mar Ifo expectations index,103.0 consensus; previous 102.5.
- (0500 EDT/0900GMT) Italy Feb trade balance - non-EU - flash; previous E230 mln deficit.
- (0830 EDT/1230GMT) US Feb durable goods orders, +0.4% m/m consensus; previous +2.8%, ex-defense +2.9%.
- (0830 EDT/1230GMT) US Feb - ex-transport,+0.3% m/m consensus; previous unchanged.
- (0830 EDT/1230GMT) US Feb - non-defense ex-air, +0.3% m/m consensus; previous +0.5%.
Key Events Ahead
- N/A London City Week IFSF conference, various speakers (till the 26th).
- N/A Sweden and Norway government bond auctions.
- (0500 EDT/0900 GMT) ECB/Finland CB Liikanen press conference in Helsinki.
- (0530 EDT/0930 GMT) ECB 91-day refi, E20 bln allotment eyed, last E22.3 bln.
- (0630 EDT/1030 GMT) Chicago Fed Evans OMFIF lecture in London.
- (1430 EDT/1830 GMT) US TsySec Lew Senate testimony.
FX Recap
USD/JPY bounced slightly from 119.71 to 119.83 into Gotobi Tokyo fix today. As this demand settled, it dropped to 119.56 levels. Another test down is likely but bids have been re-set from around 119.50 with Japanese pension fund interest again tipped. Stops are seen sub-119.20, 119.22 levels. Offers seen ahead of 120.00 with US$1.853 bln in 120.00 vanilla option expiries today.
EUR/USD remained mostly subdued early before firming later. It dropped dipped to 1.0900 early before jumping to 1.0938. Modest bids were seen pre-1.0900, the site of bln in vanilla option expiries today. Ongoing improvement in the German Ifo is expected to be reported today, which would be in line with the message from the mildly encouraging flash PMIs yesterday. Underpinning that there is a scope for a modest further weakening in the current assessment index, but an offsetting improvement in the expectations component.
GBP/USD slowed moved back up following EUR/USD from an early low of 1.4831 to 1.4877.
AUD/USD opened at 0.7878 in the Asian session and traded in 0.7859-91 range. Lack of conviction seen in and hence the relatively tight range. Spot has been no lower than 0.7859 (currently 0.7885-90). The stubbornness of the AUD has led the short end to price 15bps of easing into the April meeting, up from as low as 8bps a week ago.
NZD/USD remained largely unchanged and closed on the day at 0.7652 in New York. Fonterra maintained its FY14/15 milk payout forecast at /kg but lowered its dividend forecast from 25-35c to 20-30c. Trade data for Feb were on the light side with the surplus printing at NZD50mn (consensus: NZD350mn)
