Forex Markets All Mixed Up After Data

The US dollar once again reversed course after trading above the 100 level on Monday to decline to the 98 price on Tuesday and is now holding at 99.16 as traders see a positive out of yesterday’s retail sales data. The report printed under forecast but showed a climb in retail sales from previous months. U.S. markets closed mixed on Tuesday. Markets sentiment was impacted by the lackluster U.S. retail sales report and some mixed U.S. corporate results. The majority of the European markets ended Tuesday’s session in negative territory. Investor concerns over the situation in Greece weighed on the markets and ahead of today’s ECB meeting.

US markets were fairly positive with the Dow Jones closing at 18037 gaining 60 points, the S&P 500 added 3 points to close at 2096 and the NASDAQ was down 11 points to 4977. European markets were negative with CAC down 36 points to 5218, DAX falling 111 points (0.90%) to 12228 and FTSE gaining 11 points by 0.16% to 7075.

Asian shares are mixed this morning with Chinese data the main talking point. China’s economy grew at its slowest pace in six years in the first quarter this year, highlighting the challenge of finding new growth drivers amid a slowdown in the key pillars of construction and manufacturing.

Gross domestic product grew 7.0 per cent in the first three months of 2015 compared with the same period a year earlier, the country’s National Bureau of Statistics said on Wednesday — the weakest quarterly expansion since the depths of the global financial crisis in the first quarter of 2009. China’s economy grew 7.3 per cent in the fourth quarter last year. Economists expect the central bank, which has cut interest rates twice since November and once reduced the amount of cash the banks must hold as reserve, to dole out more policy easing. They also anticipate the government will jack up infrastructure spending.

The Australian dollar tumbled after the data release to trade at 0.7602 down by 25 points while being pressured by a strong US dollar which gained 15 points in the morning session.  The Australia dollar was hit by China’s growth data, falling to a low of 0.7583 against the dollar from $0.7604 before, and briefly touching 90.78 yen. The kiwi fared better after a rash of supportive local data helped keep the kiwi in the green at 0.7526. The New Zealand dollar jumped half a cent against the Australian dollar, moving above 99 Australian cents and sparking renewed speculation of parity, after weaker Chinese economic data weighed on the Australian dollar. Traders will be looking for any clues on whether the Reserve Bank plans any macro prudential measures to slow the Auckland housing market after Real Estate Institute figures yesterday showed Auckland house prices jumped 13 percent in March from the year earlier month, as supply fails to meet demand amid record migration.

The Japanese yen was much weaker against the US dollar at 119.65 while it traded flat against the euro at 127.21 well below its recent trading range as the euro continues to weaken. Prime Minister Shinzo Abe indicated the yen has weakened enough and that the Bank of Japan needn’t force inflation to its 2 percent target. The yen has dropped 23 percent since the Bank of Japan began unprecedented monetary stimulus two years ago, boosting profits of big exporters while heaping heavier costs on small companies and importers. The remarks cast a cloud over the government’s reflationary policies and may require the administration and the BOJ to reinforce them, according to Commerzbank AG.