FX News Today
European Outlook: The global sell off on stock markets continued in Asia overnight, with global growth concerns lingering after mixed U.S. data yesterday were followed by a dip in China’s Caixin Services PMI (more below). Japan, South Korea, Thailand and Indonesia were closed. U.S. and U.K. stock futures are moving higher, so it looks like another early attempt at stabilisation, although we have been there yesterday and stock markets still headed south in the end. Bund futures managed to claw back losses in after hour trade and could post some early gains, but yesterday’s rise in yields and widening of spreads highlights that the Eurozone still remains vulnerable to jitters in confidence. The European calendar has the UK Services PMI for April, which is expected to rise to 54.2 (med 54.1) from 53.7 in the previous month. The UK also has Halifax house price data, while the Eurozone data calendar is empty, leaving the focus on the ECB’s latest economic bulletin and ongoing Greek bailout review talks.
China Caixin Services PMI Falls: The index fell to 51.8 for April from 52.2 in March but is still growing with new business growing the most this year and business expectations remained unchanged. Expectations were for an increase to 52.6 the figures have been received as disappointing overall. “Expansion in the services sector helped offset some of the impact caused by flagging manufacturing. Overall, however, the economy still faces relatively strong downward pressure,” He Fan, chief economist of Caixin, said in a note. “The government needs to keep implementing moderate stimulus to prevent a hard landing of the economy.” The slowing in the headline index may add to market nervousness over growth.
Australian data releases beat forecasts. Retail sales rose 0.4% m/m in March, up from 0.1% the month prior and above the median forecast for a 0.3% rise. The trade deficit deflated to -A$2.2 bln in March from February’s -A$3.0 bln (revised from -A$3.4 bln), and below the median expectation for a deficit of -A$2.9 bln. New homes sales lifted by 8.9% m/m in March, more than reversing the 5.3% drop seen in February, according to Housing Industry Association data. The data is prompting upward revisions to Q1 GDP estimates and has sparked a rally in the Aussie dollar, which is presently up by just over 0.6% versus the US buck.
Main Macro Events Today
- US Initial jobless claims: Initial claims data for the week of April 23rd is out today and is expected to show a headline increase to 263k from 257 last week and 248k, forty year low, prior to that. Claims for the month are poised to average 254k from 264k in March and 261k in February.
- UK Services PMI: Expectations are for a slight fall to 53.5 from 53.7 in April, following the surprise March low of 52.7.
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