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    Dollar continues ‘tail-spin’ down after Consumer Confidence falters

    USD

    The dollar weakened on Tuesday after Consumer Confidence data fell unexpectedly to 95.2 when it had been expected to rise to 102.5 in April from 101.4 previously.

    The down-beat data reflected investor’s fears about the state of the jobs market after March’s lower-than-expected Non-Farm Payrolls.

    The S&P/Case-Shiller house price index, meanwhile, showed growth of 5.0% yoy in February – higher than the 4.7% forecast from 4.6% previously.

    The poor data increased the possibilities that the FOMC statement, released on Wednesday (Tomorrow) will carry a more-doveish-than-expected message, delaying rate hike expectations further. Markets have revised current expectations of a June hike to September now, reflecting the lacklustre data of the last few weeks and the majority of Fed member’s affirmation that their decisions will be data-driven.

    EUR

    A lack of data meant the euro was more subject to the fluctuations of counterparts and news impacting on them then its own domestic drivers, however, the recent reports that the outspoken and controversial Greek Finance Minister Varoufakis was demoted from heading up the bailout negotiation team, and that he was replaced by Tsakalotas – a more popular choice amongst creditors – held out new hope for a deal and Greece avoiding a default, which bolstered the euro’s fundamentals.

    GBP

    The pound was buffeted one way and then another on Tuesday – falling after initial data in the morning showed a disappointing contraction in GDP in Q1, which could delay when the BOE might implement monetary policy normalisation, but then rising in the U.S session on extreme dollar weakness.

    Q1 GDP increased by 2.4% yoy which was below the 3.0% of a year ago and the 2.6% expected.
    QoQ GDP showed only a 0.3% rise from 0.6% in Q4 of 2014 and substantially below the 0.5% estimate. This was the slowest rate of growth since Q4 of 2012.

    Other data showed an increase in mortgages in the U.K to 38751k from 37453; analysts had expected a figure of 37800. The data suggested an on-the-surface strong housing market continuing to flourish in Britain.

    JPY

    The yen strengthened slightly versus the dollar on Tuesday although it still remained within 10 points of Monday’s close.

    Retail sales in Japan declined at the fastest pace on record in March, underscoring the inability of BOJ policy makers to underpin demand and fuelling speculation of further monetary policy easing.

    Japan’s Retail Sales plummeted 9.7% yoy in March, falling for a third consecutive month, after last year’s surge in sales as shoppers spent lavishly ahead of a sales tax hike. Analysts were expecting a smaller decline of 7.3%. Measured on a monthly basis sales in March decreased a seasonally adjusted 1.9%.

    This week economists will be turning their attention to the BOJ’s policy meeting as well as a slew of other fundamentals, including Industrial Production, inflation and employment, for clues on the world’s third largest economy’s performance in the final month of the first quarter.

    Fitch, the rating agency, downgraded Japan’s credit rating to ‘A’ from ‘A ’ citing the lack of structural measures to replace the deferred sales tax hike and urging Prime Minister Abe to take more positive action to stimulate the economy. Moody’s had already downgraded Japan’s credit rating in December after the government deferred the second sales tax hike.

    USD

    The dollar weakened on Tuesday after Consumer Confidence data fell unexpectedly to 95.2 when it had been expected to rise to 102.5 in April from 101.4 previously.

    The down-beat data reflected investor’s fears about the state of the jobs market after March’s lower-than-expected Non-Farm Payrolls.

    The S&P/Case-Shiller house price index, meanwhile, showed growth of 5.0% yoy in February – higher than the 4.7% forecast from 4.6% previously.

    The poor data increased the possibilities that the FOMC statement, released on Wednesday (Tomorrow) will carry a more-doveish-than-expected message, delaying rate hike expectations further. Markets have revised current expectations of a June hike to September now, reflecting the lacklustre data of the last few weeks and the majority of Fed member’s affirmation that their decisions will be data-driven.

    EUR

    A lack of data meant the euro was more subject to the fluctuations of counterparts and news impacting on them then its own domestic drivers, however, the recent reports that the outspoken and controversial Greek Finance Minister Varoufakis was demoted from heading up the bailout negotiation team, and that he was replaced by Tsakalotas – a more popular choice amongst creditors – held out new hope for a deal and Greece avoiding a default, which bolstered the euro’s fundamentals.

    GBP

    The pound was buffeted one way and then another on Tuesday – falling after initial data in the morning showed a disappointing contraction in GDP in Q1, which could delay when the BOE might implement monetary policy normalisation, but then rising in the U.S session on extreme dollar weakness.

    Q1 GDP increased by 2.4% yoy which was below the 3.0% of a year ago and the 2.6% expected.
    QoQ GDP showed only a 0.3% rise from 0.6% in Q4 of 2014 and substantially below the 0.5% estimate. This was the slowest rate of growth since Q4 of 2012.

    Other data showed an increase in mortgages in the U.K to 38751k from 37453; analysts had expected a figure of 37800. The data suggested an on-the-surface strong housing market continuing to flourish in Britain.

    JPY

    The yen strengthened slightly versus the dollar on Tuesday although it still remained within 10 points of Monday’s close.

    Retail sales in Japan declined at the fastest pace on record in March, underscoring the inability of BOJ policy makers to underpin demand and fuelling speculation of further monetary policy easing.

    Japan’s Retail Sales plummeted 9.7% yoy in March, falling for a third consecutive month, after last year’s surge in sales as shoppers spent lavishly ahead of a sales tax hike. Analysts were expecting a smaller decline of 7.3%. Measured on a monthly basis sales in March decreased a seasonally adjusted 1.9%.

    This week economists will be turning their attention to the BOJ’s policy meeting as well as a slew of other fundamentals, including Industrial Production, inflation and employment, for clues on the world’s third largest economy’s performance in the final month of the first quarter.

    Fitch, the rating agency, downgraded Japan’s credit rating to ‘A’ from ‘A ’ citing the lack of structural measures to replace the deferred sales tax hike and urging Prime Minister Abe to take more positive action to stimulate the economy. Moody’s had already downgraded Japan’s credit rating in December after the government deferred the second sales tax hike.


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