FX News Today
German Retail Sales Fall: Retail sales in Germany (excluding autos and fuel sales) fell unexpectedly in February into negative territory (-0.4%) missing expectations (0.3%) and significantly below Januarys 0.7% which was the first positive figure since August 2015 and now appears something of anomaly. More evidence of weakness from the consumer and the faltering overall economic activity in Germany.
Japanese Housing Picks Up: Japan’s housing starts rose 7.8% y/y in February after the 0.2% gain in January and confounding expectations of a 2.8% drop. This was the fastest monthly rise since August 2015 when it increased 8.8%. Total Housing starts were 974,000 compared to 876,000 in January. Construction orders fell 12.4% y/y in February following the 13.8% fall in January. Overall activity in Japan’s housing market remains subdued despite these figures and continued aggressive BoJ easing.
US ADP private payrolls increased 200k in March: The rise for February was 205k (revised down from 214k). The service sector climbed 191k, while goods producing jobs edged up 9k. Jobs in trade, transport area rose 42k. Construction jobs increased 17k, while manufacturing added 3k. Professional business services oriented employment increased 28k, while financial accounting firms added 14k. The data was a little better than expected and continues to reflect a healthy labour market.
German HICP inflation rose to 0.1% y/y in March, more than expected and lifting the headline rate back into positive territory, after the -0.1% y/y rate in February. Belgian numbers, released earlier yesterday also moved higher and the data is likely to set the stage for a rebound in the overall Eurozone headline rate this month, with base effects playing a role. For now this should at least limit speculation about further action from Draghi and the use of helicopter money, especially after Coeure suggested that the latter is an interesting academic option, but not actively considered as a policy tool at the moment.
Main Macro Events Today
- German Unemployment
Ongoing economic expansion has been underpinning labour markets and German jobless rates are at very low levels, but the pace of the decline is starting to wane as growth slows down and uncertainty about the global outlook picks up. For now though the improving trend continues and we expect a renewed dip in the German jobless number of -3K (med -5K) in March, which should leave the jobless rate steady at a very low 6.2%.
- Eurozone Inflation
Yesterday’s higher than expected German inflation number is likely to set the stage for today’s round of preliminary HICP readings from France, Spain, Italy and for the Eurozone overall, and we have lifted our forecast for overall EMU HICP to 0.0% (med -0.1%) from -0.1% y/y, with an upside bias. The fall back in the headline rate to -0.2% y/y last month provided the official justification for Draghi’s latest round of easing measures, and a rise out of negative territory should at least for now dampen speculation of Draghi’s next steps and give the ECB time to concentrate on implementing what already has been announced. It also backs our view that the risk of a real deflationary spiral remains limited, despite negative headline rates. Still, Draghi’s hectic activism means markets have gotten used to immediately looking for the next step and speculation of additional measures won’t be stopped by one move higher in the headline rate.
Please note that times displayed based on local time zone and are from time of writing this report.
Click here to access the full HotForex Economic calendar.
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:
Senior Currency Strategist
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.