A weaker Yen this week
The Japanese Yen paused in its strong rally seen since early January as the currency weakened across the board. There was no major economic data to support the Yen’s weakness this week although data was mostly mixed. GBPJPY and EURJPY which were previously the biggest losers against the Yen managed to reversed their losses, with the currencies seen trading back near the 180 handle for GBPJPY and the EURJPY was seen briefly testing the 129 handle.
- Tertiary industry activity y/y 0.3% vs. -0.6%
- Flash manufacturing PMI 49.7 vs. 50.8
- SPPI y/y 3.2% vs. 3.3%
- All industries activity m/m 0.1% vs. -0.9%
Volatile Aussie on RBA Governor’s comments and mixed data
The Australian Dollar got a hammering from RBA Governor, Glenn Stevens earlier this week. In a speech to the American Australian community in New York, the RBA Governor included comments that the Aussie was expected to decline even more and that the rate cuts were still on the table. The March meeting minutes did not offer any clues with the exception that the RBA would deal with the issue of rate cuts on a monthly basis and remaining vague thereafter. CPI data released this week was mixed as well and given the fact that the actual print did not miss estimates by a wide margin, the Aussie managed to trim some of its losses after the sell off due to the Governor’s speech.
- MI Leading index m/m -0.3% vs. 0.1% previously
- CPI q/q 0.2% vs. 0.1%; trimmed mean CPI q/q 0.6% vs. 0.6%
- RBA March monetary policy meeting minutes released
Kiwi talked down by RBNZ Asst. Governor
The New Zealand dollar got a similar treatment from RBNZ Governor John McDermott who warned this week that the RBNZ could look to cut rates if demand continues to fall. The comments come during a week where the quarterly CPI for New Zealand was soft, falling-0.3% below estimates of -0.2%. The Kiwi Dollar fell sharply only to stabilize a day later but remains biased to the downside ahead of the RBNZ monetary policy meeting due in a week.
- New Zealand CPI q/q -0.3% vs. -0.2%
- New Zealand visitor arrivals m/m -3.6% vs. 6.8%
- Credit card spending y/y 5.2% vs. 5.8%
Loonie keeps gains on rising Oil
The Canadian Dollar was seen trading strong this week largely due to the rising Oil prices. Overall, the Canadian dollar continued to rally despite a few hiccups with wholesale sales shrinking for the month by -0.4%. With the markets now convinced of no further rate cuts from the Bank of Canada, the Loonie’s rally was justified. However, BoC Governor Stephen Poloz is due to speak later this evening which could bring some volatility.
- Canada wholesale sales m/m -0.4% vs. 0.2%
- BoC Governor Poloz speech
Euro – Weaker economic data and Greece
Economic data this week was weaker for the Eurozone on the whole; however the currency saw some strong rally this week but remained volatile to the ongoing Greece crisis. Despite the negative data and the risks, the Euro managed to remain stronger against the Greenback at one point as well as across other currencies. But Friday, as the Eurogroup meetings kicked off, the Euro was seen particularly susceptible to the meeting’s outcome, which at the time of writing did not see any significant breakthrough with the Greece debt negotiations.
- German PPI m/m 0.1% vs. 0.2%
- German ZEW economic sentiment 53.3 vs. 55.6
- Eurozone ZEW economic sentiment 64.8 vs. 63.7
- Italy retail sales m/m -0.2% vs. 0.1%
- Eurozone consumer confidence -5 vs. -3
- French flash manufacturing PMI 48.4; flash services PMI 50.8 vs. 52.5
- German flash manufacturing PMI 51.9 vs. 53.1; flash services PMI 54.4 vs. 55.6
- Eurozone flash manufacturing PMI 51.9 vs. 52.6; flash services PMI 53.7 vs. 54.5
- German Ifo business climate 108.6 vs. 108.5
British Pound rallies
The British Pound saw a strong rally this week fuelled by the BoE meeting minutes. Although there was nothing significant announced during the minutes, the markets saw the GBP take off ahead of two weeks to the general elections. The Pound remained strong across all of its peers with no major fundamental push to the news.
- Rightmove HPI m/m 1.6% vs. 1%
- BoE meeting minutes released
- UK retail sales m/m -0.5% vs. 0.4%
Greenback remains weak as $ bulls get frustrated with weaker data
The US Dollar continued to remain weak across the board with the US Dollar Index seeing a strong sell off every time economic data disappointed. The week was relatively quiet with no major tier-I market moving events, however regardless the US Dollar saw sharp movements, mostly to the downside, in a clear indication that the US Dollar could possibly take a pause in its strong rally, ahead of next week’s advance GDP and FOMC meeting that is due. Economic data remained mixed with the home sales data rising on the existing home sales, while new home sales fell.
- HPI m/m 0.7% vs. 0.7%
- Existing home sales m/m 5.19mn vs. 5.04mn
- Unemployment claims 295k vs. 288k
- Flash manufacturing PMI 54.2 vs. 55.6
- New home sales 481k vs. 514k
- Core durable goods orders m/m -0.2% vs. 0.3%; Durable goods orders 4% vs. 0.6%
