Economic data out through the Asian session was skewed to the positive, while the equity markets went into reverse, as we look ahead to Draghi, scheduled to speak later today and what other surprises the U.S President has for the markets.
Earlier in the Day:
Economic data released through the Asian session in the early hours of this morning included 4th quarter current account figures out of New Zealand, Australia’s March consumer sentiment numbers, February fixed asset investment and industrial production data out of China and the BoJ’s monetary policy meeting minutes from the January meeting.
For the Kiwi Dollar, the current account deficit narrowed from NZ$4.68bn to NZ2.77bn, which was worse than a forecasted narrowing to NZ$2.45bn, quarter-on-quarter, with the deficit widening from NZ$7.1bn to $7.72bn year-on-year, against a forecasted narrowing to NZ$6.9bn.
According to NZ Stats, seasonally adjusted the current account deficit widened by NZ$407m to NZ$2.0bn, quarter-on-quarter, with the widening attributed to New Zealand importing aircraft and other transport equipment, and crude oil. The increase in the imports was partially offset by an increase in the export of dairy and logs.
While the goods deficit widened, the services surplus held steady at a seasonally adjusted NZ$1.2bn, with the income deficit seeing just a NZ$6m widening to NZ$2.7bn.
The Kiwi Dollar moved from $0.73298 to $0.73256 upon release of the figures, before rising to $0.7342 at the time of writing, up 0.23% for the day.
For the Aussie Dollar, the Westpac Consumer Sentiment Index rose by 0.2% to 103 in March, following a 2.3% fall in February from January’s 4-year high 105.1.
The index sits well below historical levels, with concerns surrounding financial market volatility in the February survey shifting to concerns over the longer term economic outlook.
While sentiment improved towards family finances v a year ago (+2.4%); family finances for the next 12-months (+2.1%); economic conditions for next 12-months (+1.7%) and time to buy major household item (+0.2%), consumer sentiment towards economic conditions in next 5-yeards tumbled 4.1%, reversing most of the improved sentiment elsewhere.
The Aussie Dollar moved from $0.78564 to $0.78568 upon release of the data.
For the Japanese Yen, the January Bank of Japan monetary policy meeting minutes were released.
Unsurprisingly, the minutes revealed little the markets didn’t already know from the last policy meeting, with the BoJ seemingly unwilling to discuss a shift in policy, while it has continued to reduce the size of the monthly bond purchases, which has raised talk of the Yen moving to sub-¥100 levels this year.
The Yen moved from ¥106.487 to ¥106.631 against the Dollar upon release of the minutes. At the time of writing, the Yen was up 0.09% to ¥106.48 against the Dollar, supported by demand for the safe haven and general Dollar weakness.
Of greater significance was the release of industrial production and fixed asset investment figures out of China, which impressed this morning, with industrial production surging by 7.2% in February, well ahead of a forecasted 6.3% rise and January 6.2%. Fixed asset investment also came in well ahead of a forecasted 7% rise, increasing by 7.9%, following January’s 7.2% increase.
The Aussie Dollar moved from $0.78645 to $0.78687 upon release of the figures, before making further gains through the morning, up 0.14% to $0.7871 at the time of writing.
In the equity markets, the overnight slide in the U.S majors led to a pullback across the Asian majors this morning, with the slide coming in spite of U.S inflation figures being in line with forecasts and with core inflation sitting at 1.8%, unchanged from the previous month.
The Hang Seng led the way this morning, down 1.23% at the time of writing, with the Nikkei and ASX200 down 0.84% and 0.82% respectively, while the upbeat data out of China eased some of the pain for the CSI300, which was down 0.52%.
Adding to the downside through the Asian session was news hitting the wires of Trump looking to hit China with $60bn in tariffs on Chinese imports, focussed primarily on the tech and telecoms sectors. Such punitive tariffs will not only impact the Chinese economy, but also other economies in the region.
The Day Ahead:
Economic data out of the Eurozone is on the lighter side this morning, limited to Germany’s finalized February inflation figures and the Eurozone’s January industrial production numbers.
Inflation figures are unlikely to have a material impact on the EUR, while industrial production numbers will likely weigh, following disappointing figures out of France and Germany.
Outside of the data, ECB President Draghi is scheduled to speak this morning, with any further dovish commentary likely to pin back the EUR, while events on Capitol Hill will likely offset any EUR weakness from the stats, as Trump goes about making adjustments to the team and then there’s the trade tariff chatter to also consider.
At the time of writing, the EUR was up 0.11% to $1.2404, with plenty for the markets to consider through the day.
For the Pound, it’s another quiet day on the data front, with no material stats scheduled for release. The Pound found solid support from Tuesday’s Spring Statement and, with appetite towards the Dollar easing, $1.40 levels are just around the corner.
At the time of writing, the Pound was up 0.15% to $1.3983, with Brexit chatter likely to be the key driver through the day.
Across the Pond, economic data scheduled for release this afternoon includes wholesale price inflation and retail sales figures for February and January business inventory numbers out of the U.S.
Sensitivity to inflation will give wholesale price data greater influence than normal, which is forecasted to soften, with business inventories forecasted to be Dollar negative, while retail sales are forecasted to be Dollar positive.
As has been the case since Trump took to the election campaign trail, the markets will also be keeping an eye on Capitol Hill, with concerns over a trade war and Trump’s rejigging of his cabinet also needing consideration.
At the time of writing, the Dollar Spot Index was up 0.03% to 89.636, with more Dollar trouble likely to be on the cards in the coming days.