Week in Review: Markets cautious ahead of Doha meeting

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Risk sentiment was mixed this week despite the yen managing to recover from a 17-month low near 108 levels. The yen managed to weaken steadily through the first part of the week with BoJ officials taking a turn to step up pressure. Equities attempted to push higher amid earnings season but by Thursday, stocks were trading flat. With the Doha meeting looming over the weekend, it is very likely that the markets are in no mood to take on more risk.

On the economic front, data this week saw the Bank of Canada leaving rates unchanged ag 0.50%. While the BoC upgraded its quarterly forecasts on both inflation and GDP, it noted that the first few months of positive data could be short lived. Meanwhile, Bank of England’s monetary policy also saw interest rates unchanged at 0.50%, but the BoE continued its warnings on the risks of Brexit. While GBPUSD managed to edge higher during the first part of the week, the gains were short-lived following the BoE’s comments as well as weaker construction output which fell 0.30% in the month. Inflation was a bright spot, rising strongly by 0.50% and beating estimates of 0.30% increase while the core CPI managed to edge higher as well, rising 1.50%.

In the Eurozone, data was limited to the final CPI, which confirmed a flat reading on the headline inflation while core CPI was unchanged at 1.10%, matching estimates. Trade balance data from the Eurozone released earlier on Friday showed a modest decline during the month of February.

From China, economic data started off inflation coming in as expected, rising 2.30%, slower than the previous month while producer price index fell less than expected by 4.30% against forecasts of a 4.60% declines. Trade balance from China was also better as the economy posted a surplus with an increase in exports. On Friday, GDP data revealed that the Chinese economy grew at a pace of 6.70% less than the previous quarter’s 6.80% increase. However, the broadly better than expected data has managed to help support the risk sentiment.

In the US, economic data saw a weak CPI print in March. US headline inflation increased 0.10%, missing forecasts of 0.20% while the core CPI was also recorded at 0.10%. Retail sales were weak, rising 0.20%, less than the forecasted 0.40% while core retail sales fell 0.30%.

Data from Australia this week showed another surprise print on the labor markets. Australia’s unemployment rate fell to 5.70%, down from 5.80% previously while the economy showed a net gain in employment. AUDUSD continues to trade near a 9-month high.

Economic events this week

  • Australia home loans m/m 1.50% vs. 2.10%
  • China CPI y/y 2.30% vs. 2.40%
  • China PPI y/y -4.30% vs. -4.60%
  • Italy industrial production m/m -0.60% vs. -0.80%
  • Germany final CPI m/m 0.80% vs. 0.80%
  • Japan preliminary machine tool orders y/y -21.20% vs. -22.5% previously
  • UK CPI y/y 0.50% vs. 0.30%; Core CPI y/y 1.50% vs. 1.30%
  • UK PPI input m/m 2.0% vs. 2.40%; PPI output m/m 0.30% vs. 0.30%
  • US import prices m/m 0.20% vs. 1.0%
  • Japan PPI y/y -3.80% vs. -3.50%
  • China trade balance 29.9 billion vs. 30.2 billion
  • France final CPI m/m 0.70% vs. 0.70%
  • Eurozone industrial production m/m -0.80% vs. -0.60%
  • US core retail sales m/m 0.20% vs. 0.40%; retail sales m/m -0.30% vs. 0.10%
  • US PPI m/m -0.10% vs. 0.30%; core PPI m/m -0.10% vs. 0.10%
  • BoC leaves interest rate unchanged at 0.50%
  • US Crude oil inventories 6.6 million vs. 0.9 million
  • Australia employment change 26.1k vs. 18.6k
  • Australia unemployment rate 5.70% vs. 5.80%
  • Switzerland PPI m/m 0.0% vs. -0.20%
  • Eurozone final CPI y/y 0.0% vs. -0.10%; core CPI y/y 1.0% vs. 1.0%
  • BoE leaves interest rate unchanged at 0.50%
  • US CPI m/m 0.10% vs. 0.20%; core CPI m/m 0.10% vs. 0.20%
  • Weekly unemployment claims 253k vs. 270k
  • China GDP q/q 6.70% vs. 6.70%
  • China industrial production y/y 6.80% vs. 5.90%
  • China retail sales 10.50% vs. 10.40%
  • Japan revised industrial production m/m -5.20% vs. -6.20%
  • UK construction output m/m -0.30% vs. 0.0%
  • US empire state manufacturing index 9.6 vs. 2.1
  • US industrial production m/m -0.60% vs. -0.10%


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