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Bob Mason
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Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Aussie Dollar and the Japanese Yen were in action this morning, with economic data from China also in focus.

For the Japanese Yen

Early in the day, Tankan survey and manufacturing PMI numbers were in focus.

Tankan Survey

The stats were skewed to the positive, with the Tankan Large Manufacturers Index rising from -10 to +5 in the quarter.

In the 1st quarter, the Large Non-Manufacturing Index increased from -5 to -1. According to the surveys, the outlook also improved, with the Big Manufacturing Outlook Index climbing from -8 to +4.

The Japanese Yen moved from ¥110.764 to ¥110.785 upon release of the figures that preceded manufacturing PMI numbers.

Manufacturing

In March, Japan’s Manufacturing PMI rose from 51.4 to 52.7, revised up from a prelim 52.0.

According to the March survey,

  • The rise in the PMI signaled the strongest improvement in the health of the sector since Oct-2018.
  • A pickup in production volumes and output levels supported the increase in the PMI.
  • Output levels rose at the fastest pace since Dec-2018.
  • Manufacturers also reported a further increase in new order inflows, which was the most marked since Apr-2018.
  • New export orders increased only marginally, however, with external demand concentrated in Asia including China.

The Japanese Yen moved from ¥110.724 to ¥110.758 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.07% to ¥110.64 against the U.S Dollar.

For the Aussie Dollar

It was a particularly busy start to the day for the Aussie Dollar. Manufacturing, retail sales, and trade data were in focus early on.

Manufacturing

The AIG Manufacturing Index climbed from 58.8 to 59.9, which was the highest reading since Mar-2019.

According to the AIG report,

  • It was the 6th consecutive month of strong recovery, after the server disruptions of COVID-19 in Q2 of 2020.
  • All 6 manufacturing sectors reported positive trading conditions.
  • Machinery & equipment and textiles, clothing, footwear, paper, & printing products reported particularly buoyant conditions.

The Aussie Dollar moved from $0.76104 to $0.76116 upon release of the figures that preceded retail sales and trade date.

Retail Sales

In February, retail sales fell by 0.8%, reversing a 0.5% rise from January. This was an upward revision to a prelim 1.1% decline in the month.

According to the ABS,

  • Food retailing fell 3%, while household goods retailing rose by 0.7%.
  • Clothing, footwear, and personal accessory retailing increased by 1.6% in the month, with department store retailing climbing 2.2%.
  • Cafes, restaurants, and takeaway food services retailing also increased, with sales rising by 1.1%.
  • Other retailing fell 0.4%, however.

Trade

Trade figures were disappointing, with Australia’s trade surplus narrowing from A$10.142bn to A$7.529bn in February. Economists had forecast a narrowing to A$9.700bn.

According to the ABS,

  • Goods and services exports fell A$526m (1%) to A$38,926m.
    • Total goods exports fell A$384m, with an A$817m slide in the exports of non-rural goods weighing.
    • Rural goods exports increased by A$261m, with non-monetary gold exports rising by A$172m.
    • Services credits fell A$141m in the month.
  • The imports of goods and services rose A$1,563m (5%) to A$31,398m.
    • General merchandise imports jumped by A$1,404m, driven by an A$1,198m increase in the imports of intermediate and other merchandise goods.
    • The imports of consumption goods increased A$255m, with non-monetary gold imports rising by A$7m.
    • Capital goods imports slipped A$48m.
    • Services debits increased A$151m in the month.

The Aussie Dollar moved from $0.75813 to $0.75889 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.36% to $0.7571.

From China

Caixin Private sector PMI figures for March were in focus this morning.

The Caixin Manufacturing PMI slipped from 50.9 to an 11-month low 50.6 in March.

According to the March survey,

  • Production and new orders expanded at a more modest pace at the end of the quarter.
  • Employment conditions continued to move towards stabilization.
  • New export business returned to growth, with inflationary pressures picking up.
  • While new export orders returned to growth, domestic demand softened in March.
  • The rate of cost inflation was the steepest in 40-months, driven by rising prices for raw materials.
  • As a result, firms increased selling prices at the most marked pace since Nov-2016.
  • Firms were highly optimistic that output would continue to rise over the next year. The level of optimism was amongst the highest seen over the past 7-years.

The Aussie Dollar moved from $0.75814 to $0.75792 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.27% to $0.6966.

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The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. German retail sales figures will be in focus ahead of the European open. Forecasts are for a further decline in spending.

The focus will then shift to manufacturing PMI numbers for Italy, Spain, and the Eurozone.

Barring any revision to prelim figures, finalized manufacturing PMIs from France and Germany should have a muted impact on the EUR.

At the time of writing, the EUR was down by 0.03% to $1.1726.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Finalized Manufacturing PMI figures for March are due out of the UK.

Expect any revisions to provide the Pound with direction.

At the time of writing, the Pound was down by 0.03% to $1.3779.

Across the Pond

It’s a busy day ahead on the economic calendar. The weekly jobless claims and ISM Manufacturing PMI numbers are due out later today.

While we expect both sets of numbers to influence, the weekly jobless claims will likely have the greater impact.

Finalized Markit Manufacturing PMI figures for March are also due out but should have a muted impact on the Greenback.

Away from the economic calendar, geopolitics and chatter from Capitol Hill will continue to be areas of focus.

At the time of writing, the Dollar Spot Index was down by 0.01% to 93.226.

For the Loonie

It’s a quieter day ahead on the economic calendar, with building permit figures for February due out.

We don’t expect the numbers to influence, however.

Manufacturing sector PMIs, U.S infrastructure spending plans, and news from today’s OPEC meeting will be key drivers.

At the time of writing, the Loonie was down by 0.22% to C$1.2590 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

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