Forex Afternoon Wrap – 13/05

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Key Notes:

  • RBNZ Financial Stability Report released
  • Japan bank lending y/y 2.6% vs. 2.6% previously
  • Australia wage price index q/q 0.5% vs. 0.6%
  • Japan economy watchers sentiment 53.6 vs. 52.1
  • China industrial production y/y 5.9% vs. 6.1%
  • China retail sales y/y 10% vs. 10.4%
  • France preliminary GDP q/q 0.6% vs. 0.4%
  • Germany preliminary GDP 0.3% vs. 0.5%
  • German final CPI m/m 0% vs. -0.1%
  • German WPI m/m 0.4% vs. 0.4%
  • France CPI m/m 0.1% vs. 0.2%
  • Italy preliminary GDP q/q 0.3% vs. 0.2%
  • UK Average earnings index 3m/y 1.9% vs. 1.7%; unemployment rate 5.5% vs. 5.5%
  • Eurozone flash GDP q/q 0.4% vs. 0.5%; Industrial production m/m -0.3% 0.1%
  • BoE inflation report hearing
  • US Core retail sales m/m 0.0% vs. 0.5%; retail sales m/m 0.0% vs. 0.2%
  • US Import prices m/m -0.3% vs. 0.3%

US Data continues to disappoint. Retail sales flat!

The markets woke up today to a busy calendar from the European and US trading session. The Asian session was relatively quiet in comparison with the exception of the RBNZ’s Financial Stability Report, which saw some volatility in the Kiwi Dollar. However, the NZD managed to reverse some of the losses after the currency rose above 0.73965 levels and broke above the previous support at 0.744.

The Australian Dollar remained firmed for the most part after the currency found support near 0.78875. The Australian Wage price index released today showed a 0.5% just shy of the 0.6% estimates. The Yen was little changed with lack of any major news and was trading based on the strength and weakness of its peers.

The European trading session opened with a host of data including the GDP and CPI numbers across the Eurozone and its major economies. Data was overall in line with estimates and managed to help support the Euro. Greece continues to touch the headlines after the country managed to pay out another loan to the IMF yesterday but had to dip into its SDR account with the IMF. Focus now shifts to the ECB which is due to decide on its lending to the country and remains its only lifeline as far as liquidity is concerned. However the Euro seems to have clearly ignored the risks from Greece, at least for the moment.

From the UK, the April jobs numbers managed to meet estimates overall and the average earnings index also rose better than expected. The Pound Sterling was volatile and managed to stage a small rally after the jobs report was released. However, the BoE’s inflation report followed up which showed the Central Bank expecting inflation to return to its 2% target in 2017. The Pound was a bit weaker on the inflation report projections.

The US trading session saw the retail sales data which fell flat for the month of April. The data was expected to remain soft on the backdrop of a weaker auto sales data. However, the core retail sales also disappointed remaining flat for the month. The US Dollar saw a renewed sell-off in the markets on the news with most of the currencies gaining ground.

There is no further economic data due for the remainder of today and the markets are likely to continue trading off today’s themes.


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