Forex Daily Summary for 14 April

The Forex daily summary for 14 April features the following key notes:

• New Zealand NZIER Business confidence 23 vs. 24 previously
• New Zealand REINZ HPI m/m 6.7% vs. 0.8%
• UK BRC retail sales monitor y/y 3.2% vs. 0.2% previously
• Australia NAB business confidence 3 vs. 0
• German WPI m/m 1% vs. 0.2%
• China M2 money supply y/y 11.6% vs. 12.3%
• UK CPI y/y 0% as expected; Core CPI y/y 1% vs. 1.2%
• US Core retail sales m/m 0.4% vs. 0.7%; Retail sales m/m0.9% vs. 1.1%
• US Core PPI m/m 0.2% vs. 0.2%

Later:

• NFIB small business confidence
• Business inventories m/m

Currency markets opened today with the US Dollar stronger against the Asian currencies. Both the Aussie and the Kiwi dollars continued their declines despite a modestly optimistic economic data. The Japanese Yen was trading muted into the early Asian trading session but remained stronger against the Greenback after falling from the rising wedge pattern noted.

The European session saw the Eurozone data today including industrial production, which managed to beat estimates on both the monthly and annual basis. The Euro was however trading within a range while weaker against most of its peers. The EURUSD was trading in a tight range within the intraday highs and lows of 1.05928 and 1.05304 ahead of the US retail sales release.

The British Pound was weaker as CPI data showed 0.2% growth m/m while remaining flat y/y in March. Although there was no downside surprise, the GBP cross currencies saw a sharp selloff based on the fact that Core CPI dropped ti 1%, the lowest reading nine years. The BoE is however not expected to change its monetary policy as quoted by BoE Governor in his speech last month that the Central bank would not cut interest rates simply based on Oil prices.

There was a bit of volatility for the Yen currency crosses as Hamada, the adviser to the Japanese Premier made some notable comments, that firstly the BoJ should set its inflation target to 1% and that if the BoJ eased its monetary policy, it shouldn’t hurt the appreciation in the Yen. The comments come in stark contrast to his previous comments that a 105Yen to the Dollar was more acceptable. He retracted his statement noting that he was referring to PP (or purchasing power parity) and did not refer to the spot rate.

While the Yen weakened on his comments, the currency managed to firm up again across the board.

The US trading session saw the closely watched retail sales data being released, which although managed to improve from previous month, fell below estimates. The US Dollar saw a knee-jerk reaction selling off as the Dollar Index broke below yesterday’s low of 99.55. At the time of writing, it looks evident that price action in the Dollar index could head lower to establish support near 98.95.

The commodity risk currencies as well as Gold managed to trim its losses set in earlier in the day. More US economic data is due for release later today including the NFIB small business confidence index and business inventories.