Posted on: 25 March 2016, by: Pepperstone Support, category: Market Review
There hasn’t been any significant development since Asia walked out yesterday, as many countries have already entered the long holiday weekend.
US data releases are largely consistent with expectations:
February durable goods orders contracted by -2.8% MoM (-3.0% forecasted). Stripping out the volatile transportation component the number was -1.0% (-0.3% consensus). Core orders (capital goods orders nondef ex air), which feed into Q1 GDP, were slightly weaker than consensus (-1.8% versus -0.5% est) but should not materially affect tracking estimates for Q1 growth.
US initial jobless claims for the week ending March 19 edged up to 265k, still lower than the 269k forecasted. Continuing claims declined further to 2179k in the week ending March 12 versus 2235k consensus.
Markit US flash March services PMI bounced back to expansionary territory at 51.0 versus 51.4 forecasted. New business was soft and business outlook remains subdued, while payroll numbers rise at solid clip.
Following the durable goods report, Atlanta Fed’s GDPNow sees Q1 2016 GDP at 1.4% versus 1.9% on March 16. Bloomberg consensus for US Q1 GDP currently stands at 2.0%.
US Fed’s Bullard was speaking again and is bullish about the US outlook:
FED FORECASTS SUGGESTS NEXT HIKE MAY NOT BE FAR OFF
DOWNGRADES IN FED MARCH FORECAST `RELATIVELY MINOR'
NOT MEETING EXPECTATIONS CAN DAMAGE FED CREDIBILITY
GBPUSD remains well supported by the 1.4050-80 area. Cable touched a low of 1.4057 in the London morning but has since recovered about 100pips as risk assets trade better.
With the referendum now less than three months away, FX options market has Brexit in focus. Cable curve is very illiquid, wide and bid.
The latest Survation poll on UK’s EU referendum shows 46% for the Remain camp and 35% for the Leave camp. This is a smaller lead of 11 ppts for ‘Bremain’ compared with 15 ppts in the February poll. The poll is conducted between March 17-19 among 1006 adults, so before the Brussels attacks.
UK February retail sales figure was the only major data point during the London morning. This came in stronger than expected (-0.4% MoM versus -0.7% forecasted). Citi Economics points out the overall economy appears weaker than retail sales and consumer spending
EURUSD has been chopping in an uninspiring 50pips range on the day. Rallies towards 1.1190 are a sell today with a stop above 1.1240. Support comes in at 1.1125 (pre-Fed resistance) and 1.1060 (the key daily inflection point).
USDJPY has meandered around 112.70 for most of the day. The interest to sell USDJPY reversed a bit into the London morning.
BoJ’s Kuroda spoke in Parliament as London walked in, saying the central bank will continue easing only until 2% inflation is stable. This followingmedia reports earlier that the BoJ is likely to consider pushing back its inflation target again at the April meeting if JPY maintains its current strength and oil remains cheap, citing people close to the BoJ.
The SNB published its annual report, which reveals the central bank spent CHF 86.1bn in FX intervention over the course of 2015, largest since 2012.