FX News Today
European Outlook Asian stock markets are mixed, with the ASX posting slight gains, but Japanese markets under pressure as the Yen strengthens ahead of the Fed announcement today. UK and US stock futures are moving higher though, indicating that there is some room for improvement. Investors continue to hold back ahead of upcoming policy decision, with BoE and SNB due to tomorrow, after today’s FOMC decision. We don’t expect policy changes, but the statements will give an idea about the direction of policy going ahead.
China Premier Li discussed the financial system which he said primarily needs to support the real economy. He acknowledged that bad loans are on the rise and some industries face difficulties, but banks have enough bad loan provisions to cope with risks. Li also said China will use some market-oriented measures to lower debt levels at companies and plans to use debt-to-equity swaps to lower debt levels. Those swaps have been rumored in the marketplace and could cause a stir on the fact. He urges regulators to not lower diligence against financial risks, though the global economic recovery is fragile.
US retail sales were modestly disappointing, with small 0.1% February declines with and without autos that followed downward January revisions that more than offset small December boosts. We saw a February hit from gasoline prices and hefty upward revisions in the building material sales data since December. We expect 1.8% Q1 GDP growth after a Q4 GDP boost to 1.2% from 1.0%, with a 3.7% (was 3.8%) Q1 clip for real consumption after a small Q4 boost to 2.2% from 2.0%.
US PPI dropped 0.2% in February, the headline drop with a flat core price figure track assumptions, following the January mix of a 0.1% headline rise with a 0.4% core price surge, as oil prices weighed on the headline while core price gains moderated after surprisingly big January increases.
Main Macro Events Today
- FOMC Interest Rate Decision: FOMC now likely to remain on hold through Q1 given its downgraded outlook and the weakness in recent data, and probably won’t adjust rates upward until the June 16, 17 meeting (the next one beyond March that includes a press conference and SEP). We look for 25 bp rate hikes in June and September.
- US CPI: We expect a 0.2% February CPI headline drop led by a 10% gasoline price plunge, with a 0.1% core price increase. The “core” y/y rise should remain at January’s 2.2%. The 0.028% January U.S. CPI rise with a sturdy 0.293% core price increase beat estimates despite the expected 2.8% energy price drop and flat food price figure thanks to a 0.5% rise in medical care service prices, a 0.6% apparel price bounce after four consecutive declines, and a 0.3% new vehicle price rise after two flat figures. We also saw a fourth consecutive 0.2% rise for owners’ equivalent rent.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding on how markets work. Click HERE to register for FREE! The next webinar will start in:
Chief Market Analyst
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.