China data was skewed to the positive. Whilst failing to spur the equity markets, the EUR and the Aussie Dollar benefited.
Earlier in the Day:
After a relatively benign start to the week, it was a jam-packed economic calendar through the Asian session this morning.
In the early hours, 1st quarter inflation figures provided direction to the Kiwi Dollar, ahead of March trade data out of Japan.
The key driver through the session, however, was China’s 1st quarter GDP and March industrial production figures. Of less influence, but also noteworthy were March fixed asset investment, retail sales, and unemployment numbers.
Later on in the session, finalized industrial production figures provided further direction for the Japanese Yen.
For the Kiwi Dollar,
According to NZ Stats, the annual rate of inflation softened to 1.5% in the 1st quarter, falling beyond a forecasted 1.7%. The annual rate of inflation stood at 1.9% in the 4th quarter. Quarter-on-quarter, consumer prices rose by just 0.1%, falling well short of a forecasted 0.3% increase.
The annual tobacco tax increase on 1st January 2009 lifted cigarette and tobacco prices 9% in the quarter.
Excluding the rise in cigarettes and tobacco, inflation fell by 0.1% in the 1st quarter.
Dragging on inflation was a fall in the prices of petrol and international airfares. The price of petrol slid by 7%, quarter-on-quarter.
International airfares fell by 12% in the quarter.
The Kiwi Dollar moved from $0.67716 to $0.67018 upon release of the figures. At the time of writing, the Kiwi Dollar was down 0.43% to $0.6734 for the session, as the markets priced in a near-term rate cut.
For the Japanese Yen,
According to the Ministry of Finance, the trade surplus widened from ¥335bn to ¥529bn in March. Forecasts were for the surplus to narrow to ¥310bn.
Exports fell by 2.4%, year-on-year following on from a 1.2% decline in February. Forecasts were for exports to fall by 2.7%.
Looking at the numbers, exports to China fell by 9.4%, while rising by 4.4% to the U.S.
Year-on-year, imports rose by 1.1% in March.
Imports from China jumped by 10.9%, whilst falling by 0.2% from the U.S.
The Japanese Yen moved from ¥111.996 to ¥111.989 upon release of the figures.
Month-on-month, industrial production rose by just 0.7% in February according to finalized figures released by the Ministry of Economy, Trade and Industry. The finalized number fell well short of a forecasted and prelim 1.4% rise.
The Japanese Yen moved from ¥111.959 to ¥111.965 upon release of the figures. At the time of writing, the Japanese Yen was up 0.02% to ¥111.98 against the U.S Dollar
Out of China,
It was a data deluge this morning.
The economy grew by 6.4%, year-on-year, in the 1st quarter, which was better than a forecasted 6.3% and in line with the 4th quarter of last year.
Quarter-on-quarter, the economy grew by 1.4%, which was in line with forecasts and down on 1.5% growth from the 4th
Industrial production jumped by 8.5%, which was well above a forecasted 5.6% rise while seeing a pickup from February’s 5.3% increase.
Other stats included: retail sales, which rose by 8.7% (Forecast: 8.3); fixed asset investment rose by 6.3% (Forecast: 6.3%); and the unemployment rate, which fell to 5.2%.
The Aussie Dollar moved from $0.71747 to $0.71947 upon release of the figures. At the time of writing, the Aussie Dollar was up 0.22% to $0.7191, supported by the better than expected stats out of China.
The Day Ahead:
For the EUR,
Key stats due out of the Eurozone this morning include the Eurozone’s finalized March inflation figures and February trade data.
While a forecasted rise in consumer prices in the month of March is EUR positive, the markets will likely brush aside the numbers.
Market risk appetite will drive the EUR through the day, with the heavy data set out of China the key influence on the EUR.
Outside of the numbers, corporate earnings will continue to have an impact. Morgan Stanley is scheduled to release their earnings later today.
The big question for the markets to answer is whether an end to the U.S – China trade war will bring about a rebound in economic growth in China. For now, the consensus is yes, which will leave earnings in focus throughout the week.
At the time of writing, the EUR was up 0.24% at $1.1305.
For the Pound
Economic data due out of the UK includes March inflation figures. With the UK now in Brexit limbo for another 6-months, or possibly less, inflation would have to overshoot the BoE’s target by a substantial margin to raise the prospects of monetary policy action.
While anything in line with, or better than forecast, will support the Pound, any upside will have a limited lifespan as uncertainty over Brexit lingers.
At the time of writing, the Pound was up 0.11% to $1.3063.
Across the Pond,
It’s another relatively quiet day on the economic calendar. February trade data is due out of the U.S this afternoon.
While forecasts are for a widening in the trade deficit, there’s unlikely to be too much influence on the Dollar.
This morning’s economic data out of China and corporate earnings will remain the key driver. The Dollar was on the back foot in the early hours.
It will also be worth looking out for any chatter from the Oval Office. Updates on trade talks with China and any talk of tariffs on Japan or the EU will have an influence on the mood ahead of the long weekend.
After a relatively quiet start to the week, it’s a busier day ahead for the Loonie. Trade and inflation figures are due out of Canada. With the BoC scheduled to deliver its monetary policy decision next week, the Loonie will be particularly sensitive to the numbers.
Early support came from better than expected stats out of China.
The Loonie was up 0.05% at C$1.3343, against the U.S Dollar, at the time of writing.
With over 20 years of experience in the finance industry, Bob has been managing regional teams across Europe and Asia and focusing on analytics across both corporate and financial institutions. Currently he is covering developments relating to the financial markets, including currencies, commodities, alternative asset classes, and global equities.