FOREX News Today

German retail sales unexpectedly dropped 1.1% m/m in March. Expectations had been for a rebound from the initially reported decline in February, but even if last month’s number was revised up to 0.0% m/m from -0.4% m/m, it still means the correction in March was a surprise and disappointment. Retail sales cover only part of overall consumption and the most recent confidence numbers, which show a marked improvement in the willingness to spend suggest consumption will continue to underpin overall economic activity, but the data nevertheless suggest a downside risk to Q1 GDP numbers.

French Q1 GDP came in at 0.5% q/q, up from 0.3% q/q in Q4 last year thanks to a sharp pick up in consumption which expanded 1.2% q/q. It is difficult to say how much of this is due to the Easter effect, with the early timing of the holiday likely to have inflated the consumption number, but also translating into less hours worked. Import growth slowed markedly, while exports contracted -0.2% q/q. Gross fixed capital formation rose 0.9% q/q, a further acceleration from the 0.7% q/q in Q4 last year, which is encouraging. The annual rate still fell back though to 1.3% from 1.4% and while data confirms that the economy continued to expand in the first quarter, confidence indicators already point to a slowdown in the second quarter, so even if the better than expected French number leaves some upside risk for the Eurozone data later on, the backward looking numbers won’t change the ECB policy for now.

The Eurozone and Brexit Risks: Brexit concerns may have receded somewhat as warnings over the consequences for the U.K. are getting louder. However, while the direct economic impact of an exit from the European Union may be bigger for the U.K. than for the EU, the damage such a step could do to confidence not just into the EU, but also the single monetary union, should not be underestimated. Anti-establishment forces are gaining strength as the debate over the costs and benefits of closer cooperation intensifies and a reform-push is needed to keep the project of ever closer cooperation in Europe on track. Ultimately though, this will be easier within the union than from an outsider position.

 

Main Macro Events Today

• Euro Area GDP:  Eurozone Q1 GDP releases kick off with France and Spain early in the session, followed by overall Eurozone numbers later on. We expect broadly stable quarterly growth rates of 0.3% q/q in France and 0.7% in Spain, with the latter marginally down from the 0.8% q/q in Q4 last year. Italy and Germany only release numbers later in the month, but the preliminary overall Eurozone rate is also likely to be 0.3% q/q, unchanged from Q4 last year.

• Euro Area HICP: We have lowered our forecast for Eurozone April HICP inflation to -0.2% y/y from -0.1% y/y after the weaker than expected German and Spanish numbers. The drop back into negative territory is not really a surprise and was already flagged by Bundesbank and ECB officials ahead of the releases, so that in itself the data won’t change the policy outlook. Officials are still expecting headline rates to pick gradually later in the year, but will keep a close eye on developments in the exchange rate as well as oil prices ahead of the next forecast revisions in June.

• Canada GDP: We expect GDP to fall 0.2% in February (median same at -0.2%) after the 0.6% surge in January. The components that underpin the February GDP estimate were mixed, but with a negative bent. We anticipate a 2.5% Q1 GDP performance that will be in the ballpark of the BoC’s 2.8% estimate from the April MPR.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

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Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

BoJ refrained from easing policy, causing widespread disappointment in markets given the backdrop of a strong yen and low inflation. Data today showed April headline CPI unexpectedly falling back into deflation at -0.1% y/y, while the core reading — which the BoJ is mandated to target at 2% — dove to a three-year low of -0.3% y/y, down from 0.0% in March. The central bank left the deposit rate at -0.1% and the annual pace of QQE purchases at Y80 tln. The BoJ has left policy on hold in both of the meetings since its Jan-29 gathering, when it decided to introduce NIRP (implemented on Feb-12). The central bank once again pushed back its forecast for driving inflation to its 2% target to “during fiscal 2017” (once upon a time it was 2015). The statement maintained that the economy has “continued its moderate recovery trend,” but warned that growth would be lower due to weak export performance and kept the door ajar for further easing.

Reserve Bank of New Zealand held rates steady at 2.25% after cutting by 25 bps to 2.25% in March. The 2.25% rate setting is a record low. The March cut was driven by a concern over eroding inflation expectations. Low headline inflation was again noted, with a material decline in shorter term expectations still front and center at the Bank. Despite the lack of action in April, more rate cuts could be in store: Governor Wheeler said “Further policy easing may be required to ensure that future average inflation settles near the middle of the target range.” That’s a repeat from March.

Fed Stuck in Neutral All Over Again: The Fed had a few tricks up its rhetorical sleeves in April, but made few meaningful changes to the economic or policy outlooks in its steady decision. Growth and inflation remained finely balanced and any reference to the “balance of risks” was accordingly left out of the statement, as the FOMC continues to straddle the fence on the next move. Some excitement came with the apparent departure of “global economic and financial developments,” though this snuck back in later in the statement. A closer look at the details shows the Fed is cognizant of the poor outlook for Q1 GDP “even as growth in economic activity appears to have slowed.” It was also a little more downbeat on inflation “inflation has continued to run below the Committee’s 2% longer-run objective,” compared to “inflation picked up in recent months” previously.

Main Macro Events Today

• US GDP The first release on Q1 GDP is out today and should reveal a 0.5% (median 0.7%) headline clip for the quarter. This would follow a 1.4% pace in Q4 of last year and 2.0% in Q3. We expect the ongoing inventory unwind to weigh on the headline but the advance trade report yesterday revealed a big 3.4% import decline which is likely an extension of this unwind. Import weakness will likely benefit net exports for the quarter which will help prop up the headline.

• US Jobless Claims Claims data for the week of April 23rd should remain steady with a 247k (median 255k) headline that matches last week’s headline. Claims look poised to leave a 255k average in April which would follow a 264k average in March and 261k in February. The monthly employment report is expected to show a 210k headline from 215k in March with the unemployment rate ticking down to 4.9% from 5.0% last month.

• German Unemployment
  German jobless numbers have fallen to very low levels, but with growth slowing down, the improvement on the labour market is also running out of steam and we are looking for a slight uptick in the German sa jobless number for April of 4K, which should leave the jobless rate at a low 6.2% (medians same). The tight labour market has been pushing up wages and is underpinning consumption but the integration of the large number of refugees will be the main challenge for coming years.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

FOREX News Today

European Outlook: Most Asian stock markets are down on the day, disappointing earning results added to Yen strength weighed on Japanese markets. Oil prices are higher and the front end WTI future is comfortably above USD 44 per barrel, but investors remain cautious ahead of this week’s round of central bank decisions, which kicks off with the Fed announcement today, which will be followed by the BoJ tomorrow. Fed is unanimously expected to maintain and unchanged rate stance (there is no press conference). Hence, the focus will be on the nuances of the policy statement and we see some risk that it will be more hawkish than markets expect. In Europe, the focus is on the first release of UK. Q1 GDP data, which is expected to confirm that growth moderated somewhat at the start of the year. The UK. also has CBI reported sales data for April.

Australian CPI much weaker than expected: The headline figure for the quarter (q/q) -0.2% expected  +0.2%, previous reading  +0.4%. The yearly y/y 1.3% from previous 1.7% and expectations of 1.7%. The ‘trimmed mean’ (Core inflation) also lower at 0.2% (0.5% expected and 0.6% q/q) and 1.7% y/y expectations were for 2.0% previously 2.1%. This is a very large variance over one fifth lower than expectations.  Low inflation is effectively a tightening of interest rates so this poor number raises the expectations of the RBA having to cut rates. The RBA next meet  May 3.  AUDUSD fell over 1.7% and is currently trading at 0.7610.

ECB’s Coeure: Only sharp EUR appreciation would be concern. The Executive Board member seems to suggest that current levels are not a problem and won’t trigger further ECB action on their own. At the same time Coeure hit out at critics of the ECB’s policy, seeing that some of them miss the bigger picture. Especially Germany has been very critical of the central bank’s policies, but Coeure stressed that these critiques do not hamper the central bank’s ability to function, which implies that political pressure won’t prevent further action if the ECB sees the necessity to act.

US Weak Sentiment Signals: Revealed a weak round of March durable goods figures thanks to weak equipment data, and an expectations-led April consumer confidence drop. Yet, the April decline in the Richmond Fed index to 14 from 22 translated to a surprisingly strong 55.7 on an ISM-adjusted basis, while the Markit Services flash PMI rose to 52.1 from 51.3. Thanks to the weak equipment data, the mix lowered our GDP growth forecast to a flat figure from 0.3% in Q1 and a 2.0% clip from 2.2% in Q2. The factory sector remained weak through March despite the bounce for factory sentiment, and we still expect an upturn in the factory figures in Q2.

Main Macro Events Today

• FOMC Rate Decision: 18:00 GMT – No change expected and as there is no press conference the actual words in the Monetary Policy Statement released at 18:30 GMT will be scrutinized very closely.

• UK – GDP Prelim:.    08:30 GMT – A fall to 0.4% is expected from 0.6% last quarter and the y/y figure is expected to shrink to 2% from 2.1% last time. GBPUSD has been in a strong uptrend recently.

 

Always trade with strict risk management. Your capital is the single most important aspect of your trading business.

Janne Muta

Chief Market Analyst

If you wish to get the latest forex brokers news,you can visit our Top Forex Brokers official website:

http://www.topforexbrokerscomparison.com

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in FX and CFDs products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.