Improved sentiment towards trade discussions between China and the U.S and the start of talks between North Korea, South Korea and the U.S eased demand for the Japanese Yen, though the Asian equity markets were less convinced, following the U.S markets into the red through the session.
Earlier in the Day:
Economic data released during the Asian session this morning was limited to New Zealand’s business confidence figures for March.
Figures released this morning showed that a net 20% of businesses were pessimistic about the year ahead in March, down 1 percentage point from February’s net 19% of pessimists.
The softer number was attributed to the retail and agriculture sector, the pair seeing a material increase in pessimism, partially offset by improved optimism in the manufacturing and services sectors, while construction held steady.
Activity indicators increased across most of the sub-categories, while lingering below levels seen before last year’s General Election:
- A net 12% of firms are expecting to increase investment, up 5 pints.
- Employment intentions increased from +5% to +10%.
- Profit expectations increased from -1% to +6%.
- Export intentions rose from +16% to +24%.
- Residential construction intentions were unchanged at +33%, while commercial construction intentions rose from +6% to +10%.
- A net 28% of businesses expect the credit environment to be tougher, up 4 points, while firms’ pricing intentions increased from +25% to +29%, with inflation expectations unchanged at 2.1%.
The good news was that export intentions returned to pre-election levels, with the ANZ’s combined consumer and business confidence composite growth indicator, pointing to 2-3% growth year-on-year.
The Kiwi Dollar moved from $0.72685 to $0.72659 upon release of the figures, before moving to $0.7267 at the time of writing, down 0.10% for the morning.
While the Kiwi Dollar moved into the red through the session, the Aussie Dollar was up 0.16% to $0.7691, partially recovering from Tuesday’s 0.89% slide, off the back of a softer U.S Dollar, while hopes of a resolution to the U.S – North American crisis and easing fear of a trade war between the U.S and China saw the Japanese Yen slide 0.20% to ¥105.55 against the U.S Dollar through the morning, the softer Yen supporting a pickup in the Aussie Dollar through the crosses.
In the equity markets, the ASX200 ended the day down 0.73%, with the Nikkei down 1.64% ahead of the close. The Hang Seng and CSI300 were down 1.47% and 1.61% respectively at the time of writing, the morning slide reversing gains though the start of the week, the markets taking their cues from the Tuesday sell-off on Tuesday.
The Day Ahead:
For the EUR, economic data scheduled for release out of the Eurozone this morning includes February consumer spending figures out of France, together with April’s GfK German Consumer Climate index figures.
Forecasts are mixed, with French consumer spending forecasted to be EUR positive, while German consumer sentiment is expected to ease, though the influence of the data on the EUR will likely continue to be relatively muted as focus remains on trade war chatter and now also on the U.S, South Korea and North Korea Summit in China.
At the time of writing, the EUR was up just 0.04% to $1.2408.
For the Pound, it’s yet another quiet day ahead on the data front and, with no material stats scheduled for release to provide direction, the Pound will be in the hands of market sentiment towards Brexit and progress on talks with North Korea and of course, trade talks between the U.S and China.
At the time of writing, the Pound was up 0.22% to $1.4188 to partially reverse Tuesday’s 0.51% tumble, as the Dollar softened through the early part of the day.
Across the Pond, it’s another busy day on the economic calendar, with key stats scheduled for release out of the U.S including finalized 4th quarter GDP and GDP price index figures, February’s goods trade balance and pending home sales.
The 4th quarter GDP is forecasted to be revised up to 2.7%, which would provide some support for the Dollar, while trade figures may get a little more attention than usual, with any widening of the trade deficit likely to add to lingering concerns of a trade war, though sentiment would ultimately be dictated by updates from the U.S administration on progress or lack of progress on talks with China.
At the time of writing, the Dollar Spot Index was down 0.06% to 89.319, with the Dollar managing to hold on to Tuesday’s 0.39% gain.