FX News Today

ECB’s policy “bazooka” backfired at least yesterday, where a buffet of easing steps were at first embraced then later spurned by the markets. For a while it seemed like Draghi had found his magic touch again. By burying a rather modest deposit rate cut in a broad package of other stimulus package, including a new corporate bond purchase program, he managed to keep markets happy, bring in spreads and give stock markets a boost, but only for an hour or so. Peripheral government bonds, stressed banks and corporate bonds were the main beneficiaries. In the long run though Draghi’s eagerness to shield highly indebted countries and banks struggling with non-performing loans may come back to haunt the ECB and the Eurozone. It would appear Draghi did too good a job of signaling the moves in advance, which were clearly priced in, then followed by rapid unwinding on-the-fact. He also managed to confuse markets while he initially managed to bury the modest deposit rate cut in a host of other measures and implicit easing bias. He undid most of the good work by remarking that he doesn’t expect it to be necessary to cut rates again. Given the ECB’s track record, the only thing that means is that there won’t be another cut at the next meeting, and we would expect markets to settle down again today as the details of the stimulus package sink in. Today’s CPI number release from Germany won’t change the picture either as numbers were in line with expectations and mostly unchanged.

Japanese business sentiment deteriorated abruptly in the first quarter, the BSI Manufacturing Index indicated today. Financial market turmoil and slow demand globally had impacted negatively Japan’s flimsy economic recovery. The data pressures the policymakers to deploy extra stimulus measures to reflate an economy that is bordering on yet another recession. BSI Index measuring sentiment at large manufacturers came in at -7.9 in January-March, swinging from 3.8 in Q4 2015. BSI index is a joint survey by the Ministry of Finance and the Economic and Social Research Institute, an arm of the Cabinet Office.

OPEC, Non-OPEC meeting unlikely to happen on March 20 as previously scheduled, as Iran has yet to agree to the oil production freeze, according to sources cited on Reuters earlier. That sure could explain the reversal in NYMEX crude into the red by -1.9% and back below $38 bbl to the $37.50 area.

Canada’s erosion in Q4 capacity use was not a surprise, as the drop to 81.1% in Capacity Utilization Rate fit with the already revealed slowing in real Q4 GDP growth to an 0.8% pace (q/q, saar) from the 2.4% growth rate in Q3. Revisions were substantial in today’s report, but the pattern in 2015 remained intact: The post-recession Q4 2014 near term peak use rate was revised to 82.8% (was 83.3%), falling to 81.9% in Q1 (was 82.5%) and 80.5% in Q2 (was 81.4%) before rising to 81.6% in Q3 (was 82.0%).

 

Main Macro Events Today

• Canada Employment numbers: We expect employment to rise 10.0k in February (median same at +10.0k) after the 5.7k drop in January. The year started out in a mess, with crude oil prices plunging and global growth worries intensifying. Against that backdrop, total jobs dipped. A less dire backdrop of firmer oil prices and markets that were not melting down is expected to lead to some optimism, lifting employment in February. But the resource and manufacturing sectors remained a drag, which may leave another disappointing report.

• Baker Hughes Oil Rig Count: Trends in rig counts are significant clues for market participants in the oil and gas sector as they reveal the supply dynamics in the sector. Rig counts are reported week on Fridays. On March 7th the company announced that the international rig count for February 2016 was 1,018, down 27 from the 1,045 counted in January 2016, and down 257 from the 1,275 counted in February 2015. The worldwide rig count for February 2016 was 1,761, down 130 from the 1,891 counted in January 2016, and down 1,225 from the 2,986 counted in February 2015.

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.

FX News Today

German trade surplus narrows as exports continue to drop. Germany posted a sa trade surplus of EUR 18.8 bln in January, down from EUR 20.3 bln in the previous month. The narrowing reflects a second monthly drop in exports, which fell -0.5% m/m at the start of the year. Imports meanwhile rebounded and rose 1.2% m/m in January, after falling -1.6% m/m in December. This is nominal data that is impacted by oil prices and forex developments, but it confirms the trend of growing imports and slowing export demand, which means the German recovery is for once not export driven, but supported by consumption and lately also investment.

Reserve Bank of New Zealand (RBNZ) cut 25 bps to 2.25%, contrary to widespread expectations for no change. Rate cuts were anticipated this year, just not so soon. Today’s cut was due to a concern over eroding inflation expectations. And more 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. A further cut could come as early as next month on April 28.

China’s CPI accelerated to a 2.3% y/y pace in February from the 1.8% growth rate in January. While that left CPI expanding at the fastest pace since the middle of 2014, the gain was driven by food costs, which spiked higher during the week of Lunar New Year holidays. Colder weather also lifted food prices. Hence, the pick-up in the CPI growth rate should prove temporary. Underlying inflation remains tame, leaving ample leeway for the government to implement further monetary and fiscal stimulus this year. The PPI fell 4.9% y/y in February after the 5.3% drop in January, leaving the 48th consecutive decline.

There weren’t any real surprises from the Bank of Canada, as it left its policy rate unchanged at 0.50%. The key take-away from January, that risks to the inflation profile remained largely balanced, was repeated. Though the general tone of the announcement might have been a little more upbeat, there was still plenty of caution noted given downside global risks. Meanwhile, the S&P/TSX was the global outperformer (excluding Italy), rising almost 0.7%, doubling the gain on Wall Street, thanks to its heavy weighting in oil and commodities.

Main Macro Events Today

• ECB Interest Rate Decision: The ECB is widely expected to ease policy again today when updated set of staff projections will likely bring downward revisions to growth and inflation projections. A deposit rate cut of at least 10 bps together with the introduction of a tiered system to soften the impact is widely priced in. The ECB is also widely expected to widen monthly QE purchases but without a very large deposit rate cut or a change in the pool of assets, Draghi will eventually run into supply constraints, with German bonds the bottle neck the ECB has to funnel its monthly QE spending through unless the ECB abandons the rule of purchasing paper in line with the policy key. That, however, could be interpreted as outright state financing, and such a decoupling or too “exotic” moves could bring Draghi further into conflict with the Bundesbank, but refraining from radical steps risks disappointing markets.

• US Jobless Claims: Weekly US Jobless Claims (expectations 270k) and Continuing Jobless claims (expectations 2,218K) have been following a volatile downward trajectory since early October of last year. Weaker than expected data will add to the slowing path of rate hikes, better than expected will add to the NFP figures from last Friday and increase speculation regarding a move by the FED next week.

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.

FX News Today

Stock markets continued to decline during the Asian session. Global growth concerns are once again hitting equity markets. In Europe, the Brexit debate is hanging over the UK and in the Eurozone investors remain cautious ahead of tomorrow’s ECB meeting, after the disappointment from December. Draghi is fighting a difficult balancing act while a deposit rate cut and a tweaking of the QE program seem almost certain, the question is if he can pull a rabbit out of the hat against resistance from the conservatives at the council. US equities ended yesterday in the red as the energy sector ended down by 4.2% and the financials dropped by 1.62%. News wasn’t particularly stock market friendly with Citi down 2.4% after the CFO forecasted a 15% drop in markets revenues in Q1 and 25% dive in investment banking revenues, along with a $400 mln charge for restructuring.

Energy Action: The EIA lowered its Brent oil price forecasts, now seeing a 2016 average of $34/bbl from its prior $37 estimate, and $40/bbl in 2017, down from $50. Brent futures are currently trading at $39.88/bbl.

China bad banks need a lifeline said a NPC delegate according to an article in the WSJ (subscription), in the form of fresh funds to help the resolve rising financial risks and absorb bad assets. The so-called “bad banks” were designated in 1999 to help shoulder $200 bln in bad debts from state lenders and buy bad assets at a discount before restructuring the companies and then selling the assets at a profit. The proposal is aimed at allowing them to go public and expand their asset purchases to help mop up “zombie companies.”

Canada housing permit values fell 9.8% in January after a revised 7.7% m/m gain (was +11.3%) in December. According to Statistics Canada, the pull-back in total permit values was due to lower construction intentions for multi-family dwellings in B.C. and Ontario, along with a smaller drag from institutional buildings in Quebec and Alberta. Permit volumes slowed to a 188.4k rate in January from the 217.2k clip in December.

Main Macro Events Today

• UK Industrial Production: Industrial production numbers for January are out today and expected to improve to 0.1% from -0.4% in December. Industrial Production in the UK declined 0.40 percent YoY in December, following a 0.7 percent increase in November. December decline was the first contraction in 28 months and was mainly due to a decrease in manufacturing output.

• US Wholesale Trade: U.S. Wholesale Trade Preview: January wholesale trade data is out Wednesday and should reveal a 0.8% decline for sales with inventories down 0.2% (median -0.2%) for the month. This follows respective December figures of -0.3% for sales and -0.1% for inventories. Data in line with our forecast would allow the I/S ratio to tick up to 1.33 from 1.32 where it held in both December and November.

• BoC Rate Decision: No change is expected to the 0.50% Bank of Canada policy rate in Wednesday’s announcement. A better than expected Q4 GDP gain relative to bank expectations (+0.8% vs flat) along with three months of export gains through January are supportive of a repeat of the cautiously constructive growth outlook. We could see a bit more optimism creeping in, given the good news on GDP and exports, along with firmer oil and commodity prices relative to January and financial markets that have stabilized/improved after a poor start to the year.

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.

FX News Today

Fed governor Brainard noted some pick-up in inflation, in her comments on CNBC, with the core PCE rising to a 1.7% y/y pace in January. But that’s only one data point, she stressed, and she wants to see a pattern of increases moving toward the 2% target. Core inflation has also remained stubbornly low. She believes there’s reason for price pressures to build, especially if oil prices stabilize, upward pressures on the dollar abate, and the firming economy boosts demand. But she also sees troubling signs that inflation has moved lower of late, as she noted various downside risks to growth from abroad. She abstained from giving signs on the timing of a hike, but emphasized the two Fed mandates of growth and stable prices, and noted that there hasn’t been much progress on the latter. That suggests she won’t vote for a hike next week, or in the near future. He comments were consistent with prior remarks.

Fischer: the Fed would prefer not to use negative rates, he said in Q&A. The FOMC has been looking at what other countries have been doing, in terms of employing various policy tools, and he noted that negative rates have worked somewhat better than expected. Additionally, it seems in his mind it’s a moot point as he indicated the US is not that far away on inflation, and he sees price pressures picking up once oil and the dollar stabilize.

US consumer credit rose $10.5 bln in January after a revised $21.4 bln surge in December (was $21.3 bln). November’s $14.0 bln increase was nudged up to $14.1 bln. Non-revolving credit remained the leader, climbing $11.6 bln compared to the prior $15.9 bln increase (revised from $15.4 bln). Revolving credit declined $1.1 bln versus the prior $5.5 bln gain (revised from $5.8 bln). It’s the first decline for that component since February 2015.

Main Macro Events Today

• Final EMU Q4 GDP: The final reading of Eurozone Q4 GDP is expected to be confirm growth rates of 0.3% q/q and 1.5% y/y, but is too backward looking to change the outlook. The focus will be on the breakdown, which is likely to show that domestic demand and consumption remain the mainstay of growth, but investment seems to be also picking up, judging by national data already released.

• BoE Governor Carney Speech: Markets look forward to governor Carney’s speech in order to have clues on the banks future rates policy. We expect the BoE to stave off from hiking rates until Q4 2016 or Q1 2017. Continued disinflationary pressures along with slowing emerging market growth, together with abatement in domestic economic momentum, have been quelling BoE tightening ambitions.
• BoC Rates Decision: No change is expected to the 0.50% policy rate. A better than expected Q4 GDP gain relative to bank expectations (+0.8% vs flat) along with three months of export gains through January are supportive of a repeat of the cautiously constructive growth outlook. We could see a bit more optimism creeping in, given the good news on GDP and exports, along with firming oil and commodity prices and financial markets that have stabilized/improved after a poor start to the year.

• Canada Housing Starts and Permits: We expect starts, due Tuesday, to improve to a 175.0k unit rate in February (median 182.5k) after the back to back declines in December to 172.5k and January to 165.9k from 212.0k in November.

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.