Market Roundup
- Fed's Bullard says by removing word "patient", FOMC can return to more standard policy decision-making, where appropriate policy rate set at each meeting.
- Bank of England FPC says liquidity in some financial markets may have become more fragile.
- BOJ'S Harada: Commitment to 2 pct inflation target is important, but don't know if we can reach exactly 2 pct; need to stimulate economy with fiscal spending is declining; no comment on whether or not current yen rate is appropriate.
- United Kingdom Feb Retail Sales Ex-Fuel yy increases to +5.1 % (consensus 4.2 %) vs previous 4.8 %.
- United Kingdom Feb Retail Sales Ex-Fuel mm increases to +0.7 % (consensus 0.4 %) vs previous -0.7 %.
- United Kingdom Feb Retail Sales mm increases to +0.7 % (consensus 0.4 %) vs previous -0.3 %.
- United Kingdom Feb Retail Sales yy increases to +5.7 % (consensus 4.7 %) vs previous 5.4 %.
- European Union Feb Money-Private Loans stays flat at -0.1 % (consensus 0.1 %) vs previous -0.1 %.
- European Union Feb Money-M3 3m Moving Avg increases to 3.8 % vs previous 3.6 %.
- European Union Feb Money-M3 Annual Growth decreases to 4.0 % (consensus 4.3 %) vs previous 4.1 %.
- France Q4 Gdp Detailed qq stays flat at +0.1 % (consensus 0.10 %) vs previous 0.1 %.
- Germany Apr Gfk Consumer Sentiment increases to 10.0 (consensus 9.8 ) vs previous 9.7.
Economic Data Ahead
- (0830 EDT/1230 GMT) US Jobless Claims (Mar 21 week) consensus 290k, previous 291k
- (0830 EDT/1230 GMT) US Continued Claims (Mar 14 week) consensus 2.403 mln, previous 2.417 mln
- (0945 EDT/1345 GMT) US Markit Services PMI (flash Mar) consensus 57.0, previous 57.1
- (1100 EDT/1500 GMT) US Kansas City Fed Manufacturing Production Index (Mar) previous 5
- (1100 EDT/1500 GMT) US Kansas City Fed Composite Index (Mar) previous 1
Key Events Ahead
- (0900 EDT/1300 GMT) FRB Atlanta's Lockhart on monetary policy and the economy; Detroit, MI
- (1145 EDT/1545 GMT) FedTrade 30-year Fannie Mae / Freddie Mac (max $2.025 bln)
FX Recap
An initial bout of risk aversion in FX markets triggered by military strikes on rebels in Yemen by Saudi Arabia has given way to a broader theme of USD weakness.
USD/JPY has broken major support 119 and confirms short term weakness a decline till 118 cannot be ruled out. On the upside minor resistance is around 119.40 (20 day HMA) and any break above would extend gains till 119.70/120. Intraday bearish invalidation can happen only above 120 level.
EUR/USD rose over 1.1000 but bulls failed to lever out stops beyond the post FOMC high at 1.1062. Pair eased back with gradual loss of momentum. Moreover, divergence between US and German interest rate ran counter to its rally. Corporate USD demand surfaced as EUR/USD dropped. Spot value month end is today.
GBP/USD tested resistance levels close to 1.50 after its upward move subsequent to the UK retail sales data beat. Gains seen in early European session were triggered by a further trimming of USD longs on the back of Saudi airstrikes in Yemen. 1.4873-1.4897 was Asia range. EUR/GBP found fresh support pre-0.7353 (1.36 in GBP/EUR) after a reactive drop post the UK retail sales beat. 0.73535 was pullback low from 0.7385 (Weds high).
USD/CHF plunged to 1 month low at 0.9491 from 0.9607 on the back of the news about air strikes launched by Saudi Arabia and its Gulf allies against Iran-allied forces in Yemen. The news raised risk aversion and franc was benefitted from its traditional safe haven status.
USD/CAD moved downwards from the European open to a 3 week low nearing 1.2407 (Mar 4/5 low) as the Canadian dollar benefitted from rising oil prices following Saudi air strikes in Yemen. WTI was seen at $51.25/barrel at 6.20am. Key support seen at 1.2353/60 (Feb 3/17 lows) below 1.24.
