24 Mar 2015
What's next: EZ PMIs, UK inflation await
FXStreet (Bali) - The US Dollar and the Japanese Yen were the top performing currencies in Asia, while the Australian Dollar took the back-seat after a dismal China HSBC flash PMI number.
Key headlines in Asia
Fed’s Williams: Stronger dollar pushing down growth forecast
NZ FinMin: Strong Kiwi a headwind for exporters
Fed's Williams: Appropriate by mid-year to discuss raising rates
China HSBC PMI at 11-month low in March
Dominating themes from Friday Asia - centered on JPY, AUD, NZD
The Aussie saw selling interest from the get go in Asia, with the rate breaking marginally 0.79 in early trade only to sell-off over 50 pips to a low of 0.7839, in a market that still appears to be interested in buying dips, although one would argue that a correction was due given the overstretched rally, the decline in metals in Asia today, and the disappointing China HSBC PMI, coming at an 11-month low.
Annabel Fiddes, Economist at Markit said: “The HSBC Flash China Manufacturing PMI signaled a slight deterioration in the health of China’s manufacturing sector in March. A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers."
"Meanwhile, manufacturing companies continued to benefit from falling input costs, stemming from the recent global oil price decline. However, relatively muted client demand has led firms to pass on savings in a bid to boost new work, and cut their selling prices at a similarly sharp rate”, Fiddes added.
With regards to the Japanese Yen and the New Zealand Dollar, the former performed quite strongly today, almost matching the strong performance of the US Dollar, while the Kiwi saw a consolidation, still capped below key macro level at 0.77/7680.
Heading into Monday Europe - centered on EUR, GBP
A very busy European session awaits today, with plenty of Eurozone PMIs between 8 and 9 GMT, followed by UK inflation numbers at 9.30 GMT. Later in the US, another feast of economic indicators is due, with inflation to grab most of the headlines.
Jessica Hinds, European Economist at Capital Economics, notes: "The euro-zone composite PMI (09.00 GMT) may have risen again in March, suggesting that the economic recovery continued in Q1. The fall in the euro may have provided a boost to manufacturing activity, and with household spending supported by the low level of oil prices, the services sector component may have nudged up too. On balance, we see the headline index rising from 53.3 to around 53.5, leaving the average for Q1 at 53.1, above Q4’s 51.5."
Meanwhile, Brian Daingerfield, FX Trading Strategist at RBS, shared his view on the UK CPI, noting that "the data comes after wage data last week showed a larger-than-expected drop in average hourly earnings growth." RBS economists "look for both headline and core inflation to edge lower in February, with core inflation seen as dipping to 1.3% y/y." As per the prospects for the British Pound today, Brian adds that "concerns about a stronger GBP by the BoE, falling inflation, and a pickup in political uncertainty ahead of May elections leaves GBP vulnerable to further downside in our view."
Key headlines in Asia
Fed’s Williams: Stronger dollar pushing down growth forecast
NZ FinMin: Strong Kiwi a headwind for exporters
Fed's Williams: Appropriate by mid-year to discuss raising rates
China HSBC PMI at 11-month low in March
Dominating themes from Friday Asia - centered on JPY, AUD, NZD
The Aussie saw selling interest from the get go in Asia, with the rate breaking marginally 0.79 in early trade only to sell-off over 50 pips to a low of 0.7839, in a market that still appears to be interested in buying dips, although one would argue that a correction was due given the overstretched rally, the decline in metals in Asia today, and the disappointing China HSBC PMI, coming at an 11-month low.
Annabel Fiddes, Economist at Markit said: “The HSBC Flash China Manufacturing PMI signaled a slight deterioration in the health of China’s manufacturing sector in March. A renewed fall in total new business contributed to a weaker expansion of output, while companies continued to trim their workforce numbers."
"Meanwhile, manufacturing companies continued to benefit from falling input costs, stemming from the recent global oil price decline. However, relatively muted client demand has led firms to pass on savings in a bid to boost new work, and cut their selling prices at a similarly sharp rate”, Fiddes added.
With regards to the Japanese Yen and the New Zealand Dollar, the former performed quite strongly today, almost matching the strong performance of the US Dollar, while the Kiwi saw a consolidation, still capped below key macro level at 0.77/7680.
Heading into Monday Europe - centered on EUR, GBP
A very busy European session awaits today, with plenty of Eurozone PMIs between 8 and 9 GMT, followed by UK inflation numbers at 9.30 GMT. Later in the US, another feast of economic indicators is due, with inflation to grab most of the headlines.
Jessica Hinds, European Economist at Capital Economics, notes: "The euro-zone composite PMI (09.00 GMT) may have risen again in March, suggesting that the economic recovery continued in Q1. The fall in the euro may have provided a boost to manufacturing activity, and with household spending supported by the low level of oil prices, the services sector component may have nudged up too. On balance, we see the headline index rising from 53.3 to around 53.5, leaving the average for Q1 at 53.1, above Q4’s 51.5."
Meanwhile, Brian Daingerfield, FX Trading Strategist at RBS, shared his view on the UK CPI, noting that "the data comes after wage data last week showed a larger-than-expected drop in average hourly earnings growth." RBS economists "look for both headline and core inflation to edge lower in February, with core inflation seen as dipping to 1.3% y/y." As per the prospects for the British Pound today, Brian adds that "concerns about a stronger GBP by the BoE, falling inflation, and a pickup in political uncertainty ahead of May elections leaves GBP vulnerable to further downside in our view."