Get a free Quote

From CCY
please type the characters you see:
(spam filter)
spam control image

Apply now

Obligation free account and currency commentary btn_apply_for.gif
Browse By Topic

FX News

Most recent FX News:

Read more

Economies of Note - 27th March

Written by Ian Dobbs on March 27th, 2015.      0 comments

It has been a very quiet week for economic releases from Australia with only the RBA’s Financial Stability Review of any note. To be fair, even this only drew scant attention with little in the way of market moving revelations. The bank believes the Australian financial system is strong, bank assets are improving, and households are well placed to service their debt. They have said that risks in the commercial property market appear to be growing, and interest only loans are an area of concern, but none of this is really news. Next week should prove a little more interesting with private sector credit, building approvals, and the trade balance set for release.

New Zealand
The only release of note from New Zealand this week was the trade balance on Wednesday. That came in significantly lower than forecast at NZ$50m. Expectations were for a result of NZ$375m. The softer than expected result was driven by lower than forecasted exports, down 13% on last February, combined with higher than forecast imports which were 3.7% up on last February. The overall trade deficit for the year ended February was $2.2 billion, the biggest it’s been since August 2009. Next week from NZ we have business confidence data and another dairy auction from Fonterra to digest.

United States
We have seen a mixed bag of data from the United States this week. The two key releases were inflation and durable goods orders. The headline inflation number came in right on expectation at 0.2% for the month, while the core inflation reading, also 0.2%, was a touch better than expected. The Fed would have been relieved to see the number didn’t come in on the low side, but they won’t have been so happy about durable goods orders. These produced another poor result in February coming in down 1.4% and January’s increase of 2.8% was revised down to 2.0%. The weakness was broad based with the core number, which excludes transportation, also declining by 0.4% m/m. The USD came under pressure on the back of this data, but quickly recovered after comments from the Fed’s Lockhart hit the wires. He suggested it’s “quite likely” interest rates will go up sometime between June and September, unless the Fed were really disappointed with the stream of economic data coming in. These comments contrasted somewhat with those of the Fed’s Evan’s who said he sees no compelling reason to hurry on rate hikes, and he needs much more confidence on the inflation outlook before hiking. Other second tier data this week has been supportive of the USD. New home sales jumped massively, so much so it looks like some seasonal adjustment factors are to blame, manufacturing and service PMI’s improved, and weekly unemployment claims dropped. Tonight we have the final (third) reading of fourth quarter GDP which is expected to come in at 2.4%. Growth in the first quarter of this year will be a lot lower than that, potentially below 2.0%, but we won’t see that data for another month. Next week we get consumer confidence, ISM manufacturing PMI, the trade balance, and non-farm payrolls data.

United Kingdom
The Bank of England (BOE) will have breathed a sigh of relief that inflation didn’t go negative in February. It wasn’t far off though printing at 0.0% for the month, which is just a touch below the 0.1% expected. Retail prices hit their lowest level since 2009 helped by a price battle between supermarket chains. The BOE’s deputy governor said the real drivers behind inflations decline were temporary and mainly external. “It is mainly about import prices and the sharp drop in the price of oil as well as the effects of sterling’s appreciation in the past. If you take out those temporary factors, the underlying core inflation is not that low” he said. The bank has repeatedly said they will look through this ‘temporary’ weakness in inflation and the next move in interest rates is likely to be up. It’s just a question of when that will come. Last night release of retail sales was certainly encouraging with sales jumping 0.7% vs 0.4% expected. The prior number was revised higher as well. The UK consumer looks to be in good spirits buoyed by cheap petrol prices and record low inflation that is boosting real incomes. This strong spending should support growth in the first quarter. Next week to draw focus we have the current account, the final reading of GDP, manufacturing PMI and construction PMI.

Data out of Europe this week has been consistent with the fledgling recovery starting to take hold. Both the manufacturing and service PMI readings for the Eurozone improved by more than expected and printed at their best levels in more than six months. Germany lead the way with their manufacturing PMI jumping to an eight month high, and German confidence indicators are also on the way up. Low oil prices and a weak exchange rate are certainly helping to fuel these ‘green shoots’ of growth. Next week to draw focus we have data on inflation, unemployment, French consumer spending, German retail sales, along with manufacturing PMI’s from Spain and Italy.

The only data of significance released from Japan so far this week has been manufacturing PMI. This showed manufacturing activity continued to expand in March, but at a much slower pace than previously. The index fell to 50.4 from a prior reading of 51.6. This does raise some concern that the recovering economy might be losing some momentum. We have a rash of releases set for early this afternoon which should provide a better picture of how the economy is performing. Household spending, inflation, unemployment and retail sales are all set for release. Next week to draw focus we have industrial production, average cash earnings, and the quarterly Tankan report.

It has been a very quiet week for economic data from Canada. There have in fact been no economic releases, with just a speech from Bank of Canada Governor Poloz to draw focus. He said first quarter growth looks a little softer than the bank’s 1.5% estimate and it will take more time to assess the impact of oil. He added the housing market remains a key vulnerability. He is right to be concerned as recent indicators suggest the housing market has turned, particularly in the nation’s oil producing regions. Resale activity in some parts of Alberta is down between 30 per cent and 40 per cent from October to January, and this is starting to affect prices on the national level. The new house price index fell 0.1% in January, which marks the first decrease in half a decade. Next week we have the raw materials price index, GDP data, and the trade balance to digest.