Global Markets:

  • China GDP q/y: 7.4%, Expected: 7.4%, Previous: 7.7%
  • China Chinese Retail Sales (y/y): 12.2%, Expected: 12.1%, Previous: 11.8%
  • China Industrial Production (MAR) (y/y): 8.8%, Expected: 9%
  • Australia MI Leading Index (m/m): 0.0%, Previous: -0.1%
  • New Zealand CPI (y/y): 1.5%, Expected: 1.7%, Previous: 1.6%
  • New Zealand CPI (q/q): 0.3%, Expected: 0.5%, Previous: 0.1%
  • Japan’s Chief Cabinet Secretary Suga says Japan’s economy is starting to improve on domestic demand
  • BOJ’s Governor Kuroda says it’s too early to discuss QE exit policy
  • BOJ’s Governor Kuroda says Japan’s labor market is becoming considerably tight
  • BOJ’s Governor Kuroda says a weaker yen, and energy costs are contributing to price rises
  • Japan’s Finance Minister Aso says a drop in demand after tax hike seems less than expected
  • Fed’s Rosengren says foreign shocks ‘significant risk’ to forecast, sees US GDP growth rate of 3% over next two years
  • Fed’s Rosengren says jobless rate at 5.25% is full employment and sees inflation returning slowly to 2%
  • Fed’s Rosengren says rates should depend on progress on dual mandate, & guidance should be ‘highly’ dependent on data
  • Asian equity markets have risen overnight; Nikkei up 2.50 % while the Shanghai Composite rose 0.25 %
  • Hang Seng and Australia’s ASX up 0.70 %
  • Gold at $1298 (-0.15 %), Silver at $19.48 (-0.05 %), Crude Oil at $103.81 (+0.05 %)
  • US 10 year yield at 2.632

 FX Flows/Orders:

  • AUD/USD – bids at 0.9330 proved as good intraday support and the pair bounced back to 0.9360. 0.93 is pivotal support + stops below in good size. To the topside, offers from leveraged names ahead of the 0.94 level. Bank flows show steady selling from leveraged funds the past few sessions; traders less willing to buy the Aussie at such high levels.
  • EUR/JPY – the third strong bounce ahead of the 140.00 level and the large stops below have survived once again. Large buying from Japanese names drove the pair to a current session high of 141.30. Short-term resistance at 141.50/60; stops above.
  • EUR/USD – we saw a slow rise since it bounced off 1.3790. Banks saw solid bids at that level, but note that selling interest from leveraged names & real money funds remains persistent. Offers noted at 1.3850 and in better size towards 1.3880. Intraday stops located through 1.3780.
  • GBP/USD – trades with a bid tone and upbeat employment data could trigger another test of the 1.6820 level. To the downside, bids at 1.6680 and large at 1.6620/30.
  • NZD/USD – initial support at 0.8580, but 0.8520 is pivotal. Close beneath could lead to further position covering + plenty of stops sub-0.85.
  • USD/JPY – has finally broken out of its frustratingly tight range, reaching a session high of 102.25. Initial resistance seen at 102.37 (daily Ichi cloud base), then offers lined up pre-102.50. Break above 102.70 could spark further upside momentum.

Market Sentiment:

China’s GDP came in slightly higher than the median forecast of 7.3 %, but at the slowest pace in the past 18 months. Traders were speculating that momentum could prompt action from the Chinese government, but for now, they have ruled out major stimulus programs to fight short-term dips in economic growth. The other key data release overnight was the New Zealand CPI print, which was surprisingly low, at 1.5 % vs 1.7 % expected. Bank analysts think that despite the lack of a smoking gun on the immediate inflation front, the strengthening demand backdrop looks set to push annual inflation to around 2 percent by the end of the year. The RBNZ will remain on track to raise interest rates in April and June.

Looking ahead, employment data out of the UK and Euro Zone inflation figures will be the key events during the London session. Later in the day, we have the Bank of Canada meeting. The market is expecting no changes in the key language with the bank likely to note that downside risks to inflation continues to be important as inflation is expected to only gradually return to the target level. Domestic data have been better than expected the past few weeks, so the market might be expecting a slightly more positive outlook. However, a neutral and rather cautious tone from the BoC could lead to renewed CAD weakness.

Upcoming Events:

  • 09:30 GMT – UK Claimant Count Change (-30.0k)
  • 09:30 GMT – UK Unemployment Rate (7.1 %)
  • 10:00 GMT – Euro Zone CPI (1.0 % MoM, 0.5 % YoY)
  • 13:00 GMT – FOMC Member Stein speaks
  • 13:30 GMT – US Building Permits (1.02M)
  • 13:30 GMT – US Housing Starts (0.975M)
  • 14:15 GMT – US Industrial Production (0.5 % MoM)
  • 15:00 GMT – Bank of Canada Interest Rate Decision (1.00 %)
  • 15:00 GMT – Bank of Canada Governor Poloz speaks
  • 17:15 GMT – Fed Chair Yellen speaks
  • 18:25 GMT – FOMC Member Fisher speaks
  • 19:00 GMT – US Beige Book