DAILY MARKET COMMENTARY
4 April 2012 – 8:00 GMT
Wednesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
Australia chalked up a second consecutive trade deficit in February triggering a 30 pip drop in AUDUSD. Losses could have been greater had a technical support line not made its presence felt. The consensus had been looking for a rebound back into surplus territory, as the effects of the Lunar New Year holiday were expected to have worn off by now. However, iron ore exports only partially recovered from January's steep drop, and the value of coal exports fell another -16% m/m. Naturally questions are now being asked if this latest data point is yet another symptom of a China slowdown. We reserve judgment for now, and note that inclement weather may have disrupted iron ore shipments in particular. The dollar continued its broad-based advance overnight in the wake of the FOMC minutes which suggested the Fed is some distance away from pushing the QE3 button. This stands in contrast to the impression markets received after Chairman Bernanke's March 26th speech.
Overall, our analysts note that the minutes have laid a marker for eventual altering of the 'late 2014' guidance for the FOMC, though material movements are needed both on growth and inflation to ultimately achieve revision in their current policy communication. The Fed's staff forecasts also pointed to better GDP figures and higher inflation, and trend growth was downgraded. A stronger-than-expected payrolls print would set the stage for a robust Q2 for both the dollar and risk appetite. Within a G10 context, the Fed still appears well ahead of the curve, though the ECB, which meets on Wednesday (a day earlier than usual), is more likely to act on an inflationary impulse, and we see the possibility of an ECB rate hike in 2013 if the sovereign debt situation continues to improve. Germany and the UK will release services PMI figures for March, while the ADP report and non-manufacturing ISM are due in the US.
EUR
The ECB will host its policy rate decision on Wednesday, a day earlier than usual. Our analysts and the market are looking for rates to remain unchanged, and we do not expect inflation to be a major issue in the short term.
Germany Chancellor Merkel said that EU governments will probably cede more powers to the European Union in future, and warned that external investors may shun the euro area unless it pursues reforms.
Spain announce that total central government borrowing will reach 79.8% of GDP in 2012, and that it would increase use of long-term debt, and reduce the use of bills. The budget minister warned that Spain is in a 'critical situation, at the limit', while 2012 interest payments could amount to 2.75% of GDP. Spanish bond yields increased as a result.
The EU said that Portugal's financing projections included in the country's external aid program 'remain valid', while the liquidity position of domestic banks has improved considerably. The 2011 rescue plan for Portugal still assumes a return to markets by 2013, so that EUR 16 bn in bonds can be issued.
GBP
March construction PMI rose to 56.7 vs 53.4 consensus. Construction only represents a small sector in the UK economy (5%) but still provides more encouraging signs for the BoE. As the most important indicator, Wednesday's services PMI will be even more closely watched. Industrial production and BoE decisions are due on Thursday.
AUD
The Australian trade balance was much weaker than expected showing a deficit of A$ -0.48 bn while the consensus had been looking for a surplus of A$ +1.1 bn.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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Wednesday, April 04, 2012
Tuesday, April 03, 2012
3rd of April 2012 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
3 April 2012 – 8:00 GMT
Tuesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BULLISH Focus is on 1.3386; a clearance of this level would trigger extension of gains to the key high of 1.3486. Support holds at 1.3252 for now.
USDJPY BEARISH A close below 81.96 is required to confirm the break of the level and open next support at 81.47. Resistance is at 83.30.
GBPUSD BULLISH Next target resistance is at 1.6096, where a break would open the key high of 1.6167. Support lies at 1.5947.
USDCHF BEARISH Pressure is on 0.9002; a break here would favour extension of weakness to 0.8961. Resistance is at 0.9094.
AUDUSD NEUTRAL Resistance is at 1.0515, the 38% retracement of the March sell-off. Initial support lies at 1.0305 ahead of 1.0260.
USDCAD NEUTRAL Violation of 0.9901 has exposed the March 19 low of 0.9861. Resistance holds at 0.9991.
EURCHF NEUTRAL Support is at 1.2000. Resistance is at 1.2070.
EURGBP NEUTRAL Trend conditions are unclear at the moment. Initial support lies at 0.8283 ahead of 0.8264. Resistance is at 0.8355.
EURJPY BULLISH The cross remains constructive above 108.49. We expect the cross to trade back to the recent high of 111.26 where a break would expose 111.60.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
3 April 2012 – 8:00 GMT
Tuesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BULLISH Focus is on 1.3386; a clearance of this level would trigger extension of gains to the key high of 1.3486. Support holds at 1.3252 for now.
USDJPY BEARISH A close below 81.96 is required to confirm the break of the level and open next support at 81.47. Resistance is at 83.30.
GBPUSD BULLISH Next target resistance is at 1.6096, where a break would open the key high of 1.6167. Support lies at 1.5947.
USDCHF BEARISH Pressure is on 0.9002; a break here would favour extension of weakness to 0.8961. Resistance is at 0.9094.
AUDUSD NEUTRAL Resistance is at 1.0515, the 38% retracement of the March sell-off. Initial support lies at 1.0305 ahead of 1.0260.
USDCAD NEUTRAL Violation of 0.9901 has exposed the March 19 low of 0.9861. Resistance holds at 0.9991.
EURCHF NEUTRAL Support is at 1.2000. Resistance is at 1.2070.
EURGBP NEUTRAL Trend conditions are unclear at the moment. Initial support lies at 0.8283 ahead of 0.8264. Resistance is at 0.8355.
EURJPY BULLISH The cross remains constructive above 108.49. We expect the cross to trade back to the recent high of 111.26 where a break would expose 111.60.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
3rd of April 2012 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
3 April 2012 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
The RBA held the cash rate at 4.25%, in line with expectations. The rates market had 8bp of easing priced in, and AUDUSD jumped 20 pips immediately. The more dovish policy statement quickly put an end to the rally and the pair soon dropped 40 pips below its pre-announcement level. Growth was deemed to be "somewhat below trend" and "somewhat lower than earlier estimated". This represents a significant shift from the "close to trend" language used previously.
The rhetorical shift means the RBA may consider a rate cut in May if the Q1 inflation reading (due on April 24) is low enough. If a cut eventually materializes this would not do AUD any favours in our view. However, even with a policy rate at 4% AUD would still offer by far the most attractive carry in G10, and still be the first port of call for yield-hungry investors.
The events calendar is relatively quiet today. FOMC minutes from the March 14 meeting are due, and this will provide the latest opportunity to assess policy opinion across the committee. However, thirteen of the seventeen FOMC officials have already aired their views in public since the meeting - including Fed Chair Bernanke himself - and so the scope for a market-moving surprise is limited. The April 25 meeting is now just over 3 weeks away and promises to be a far more interesting affair. At this meeting the Fed Funds target forecasts are due to be updated for the first time since they were first presented in January. This will provide an instant quantitative measure of how opinion is distributed across the committee - and just as importantly how this opinion has changed over the past three months in response to the improving economic data flow.
Overnight EURUSD traded 1.3314-1.3356 and USDJPY 81.56-82.23. Asian equities were mixed, despite the S&P500 climbing a further 0.75% to set another 4-year high.
EUR
Spain's Prime Minister Rajoy defended his decision to press ahead with an austerity program, and warned members of his party that 'the alternative is infinitely worse'. He stressed that losing market access is not 'theoretical', citing precedents within the Eurozone. More details on Spain's budget are due today after an outline was released last week.
Germany's CDU Parliamentary Leader Kauder said that Spain is currently doing all it can to meet goals, and there is 'no need' to discuss the possibility of Spain needing a bailout.
EU Economics Commissioner Rehn said that he saw a gradual recovery in confidence and growth later this year, but he again warned that the Eurozone economy is being hampered by debt and structural problems. Monday's Eurozone-wide data appeared to confirm Rehn's bleak near-term prognosis. Eurozone Manufacturing PMI was confirmed at 47.7, a fall from February's print of 49. The French number was revised down to 46.7 and the German number up to 48.4. The Eurozone February jobless rate rose to 10.8%, in line with consensus. The Italian February jobless rate rose to 9.3%, the highest increase since January 2004.
GBP
The UK's construction PMI is due, and the consensus expects a modest drop to 53.4 (from 54.3). On Monday the manufacturing PMI came in at 52.1, well above expectations of 50.7, and set a 10-month high. The more important services PMI is not due until Wednesday.
AUD
Apart from the unchanged policy rate, retail sales data were also released. They grew in line with consensus at +0.2% m/m. More evidence of the two-speed economy is evident in the data as our Australia economics team observes: resource-rich Western Australia showed a +1.0% m/m increase while NSW and Victoria showed monthly declines.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
3 April 2012 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
The RBA held the cash rate at 4.25%, in line with expectations. The rates market had 8bp of easing priced in, and AUDUSD jumped 20 pips immediately. The more dovish policy statement quickly put an end to the rally and the pair soon dropped 40 pips below its pre-announcement level. Growth was deemed to be "somewhat below trend" and "somewhat lower than earlier estimated". This represents a significant shift from the "close to trend" language used previously.
The rhetorical shift means the RBA may consider a rate cut in May if the Q1 inflation reading (due on April 24) is low enough. If a cut eventually materializes this would not do AUD any favours in our view. However, even with a policy rate at 4% AUD would still offer by far the most attractive carry in G10, and still be the first port of call for yield-hungry investors.
The events calendar is relatively quiet today. FOMC minutes from the March 14 meeting are due, and this will provide the latest opportunity to assess policy opinion across the committee. However, thirteen of the seventeen FOMC officials have already aired their views in public since the meeting - including Fed Chair Bernanke himself - and so the scope for a market-moving surprise is limited. The April 25 meeting is now just over 3 weeks away and promises to be a far more interesting affair. At this meeting the Fed Funds target forecasts are due to be updated for the first time since they were first presented in January. This will provide an instant quantitative measure of how opinion is distributed across the committee - and just as importantly how this opinion has changed over the past three months in response to the improving economic data flow.
Overnight EURUSD traded 1.3314-1.3356 and USDJPY 81.56-82.23. Asian equities were mixed, despite the S&P500 climbing a further 0.75% to set another 4-year high.
EUR
Spain's Prime Minister Rajoy defended his decision to press ahead with an austerity program, and warned members of his party that 'the alternative is infinitely worse'. He stressed that losing market access is not 'theoretical', citing precedents within the Eurozone. More details on Spain's budget are due today after an outline was released last week.
Germany's CDU Parliamentary Leader Kauder said that Spain is currently doing all it can to meet goals, and there is 'no need' to discuss the possibility of Spain needing a bailout.
EU Economics Commissioner Rehn said that he saw a gradual recovery in confidence and growth later this year, but he again warned that the Eurozone economy is being hampered by debt and structural problems. Monday's Eurozone-wide data appeared to confirm Rehn's bleak near-term prognosis. Eurozone Manufacturing PMI was confirmed at 47.7, a fall from February's print of 49. The French number was revised down to 46.7 and the German number up to 48.4. The Eurozone February jobless rate rose to 10.8%, in line with consensus. The Italian February jobless rate rose to 9.3%, the highest increase since January 2004.
GBP
The UK's construction PMI is due, and the consensus expects a modest drop to 53.4 (from 54.3). On Monday the manufacturing PMI came in at 52.1, well above expectations of 50.7, and set a 10-month high. The more important services PMI is not due until Wednesday.
AUD
Apart from the unchanged policy rate, retail sales data were also released. They grew in line with consensus at +0.2% m/m. More evidence of the two-speed economy is evident in the data as our Australia economics team observes: resource-rich Western Australia showed a +1.0% m/m increase while NSW and Victoria showed monthly declines.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
Monday, April 02, 2012
2nd of April 2012 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
2 April 2012 – 8:00 GMT
Monday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BULLISH If resistance at 1.3386 gives way, risk would be for extension of gains to the key high of 1.3486. Support holds at 1.3252 for now.
USDJPY BULLISH Failure to follow through on the break of 81.96 has shifted our focus back to upside. A recovery through 83.39 would expose 84.18. Support is at 81.83.
GBPUSD BULLISH Next target resistance is at 1.6096, where a break would open the key high of 1.6167. Support lies at 1.5947.
USDCHF BEARISH A closing break below 0.9016 would favour extension of weakness to 0.8961. Resistance is at 0.9094.
AUDUSD NEUTRAL Resistance is at 1.0515, the 38% retracement of the March sell-off. Initial support lies at 1.0305 ahead of 1.0260.
USDCAD NEUTRAL The pair is under pressure again signaling downside risk. Initial support lies at 0.9901, while resistance is at 1.0019.
EURCHF NEUTRAL Opened gap down, support is at 1.2000. Resistance is at 1.2070.
EURGBP NEUTRAL Initial resistance is at 0.8395 ahead of the key bull trigger at 0.8424. Support lies at 0.8300.
EURJPY BULLISH The cross is back up targeting the key high of 111.26; a break here would open 111.60. Support is at 108.77.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
2 April 2012 – 8:00 GMT
Monday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD BULLISH If resistance at 1.3386 gives way, risk would be for extension of gains to the key high of 1.3486. Support holds at 1.3252 for now.
USDJPY BULLISH Failure to follow through on the break of 81.96 has shifted our focus back to upside. A recovery through 83.39 would expose 84.18. Support is at 81.83.
GBPUSD BULLISH Next target resistance is at 1.6096, where a break would open the key high of 1.6167. Support lies at 1.5947.
USDCHF BEARISH A closing break below 0.9016 would favour extension of weakness to 0.8961. Resistance is at 0.9094.
AUDUSD NEUTRAL Resistance is at 1.0515, the 38% retracement of the March sell-off. Initial support lies at 1.0305 ahead of 1.0260.
USDCAD NEUTRAL The pair is under pressure again signaling downside risk. Initial support lies at 0.9901, while resistance is at 1.0019.
EURCHF NEUTRAL Opened gap down, support is at 1.2000. Resistance is at 1.2070.
EURGBP NEUTRAL Initial resistance is at 0.8395 ahead of the key bull trigger at 0.8424. Support lies at 0.8300.
EURJPY BULLISH The cross is back up targeting the key high of 111.26; a break here would open 111.60. Support is at 108.77.
SCHEDULE
Please visit our Economic Calendar for a for a schedule of market news and events: http://www.fibosignals.com/5585/calendar.html.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
2nd of April 2012 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
2 April 2012 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
China's official manufacturing PMI released over the weekend came in at 53.1 (cons. 50.8), substantially beating consensus opinion. The Australian dollar was the main beneficiary and climbed over 100 pips at the Asia open, although the rally eventually lost some steam after a very weak Australian building approvals report. The weekend PMI was all the more surprising given investors had been mentally prepared for a soft print after the weak private sector flash estimate released over a week ago. The weekend PMI is likely to continue to set a positive tone throughout the week, although US data releases such as ISM and non-farm payrolls will also be key. In particular, the data comes at a crucial moment for AUD given the RBA is scheduled to meet on Tuesday. Our Australia economics team expect no change to the cash rate and the latest Chinese numbers support this view - despite a loss of momentum in recent Australian economic data.
USDJPY has also started the week on a firmer note as Japan's new fiscal year gets underway. The prospect of yield-seeking yen-outflows over the weeks ahead should keep the pair on a trajectory towards our 3m target of 85.00. Japan's Tankan survey was slightly weaker than expected which gave USDJPY a nudge higher by slightly raising the risk of another round of BoJ easing. US data on Friday showed core PCE in line at +1.9% y/y while University of Chicago consumer confidence survey hit a 13-month high. BoE and ECB policy decisions are due this week and our economists expect no material change in policy settings.
EUR
Eurozone finance ministers agreed to raise the ceiling on the combined EFSF/ESM bailout facility to EUR 700 bn from EUR 500 bn previously. Although this option was the least ambitious of those on the table, it is still very much in line with consensus opinion, and so is unlikely to be market moving. Reuters reported that Germany, Finland, the Netherlands, Estonia and Slovenia opposed a larger increase in the fund.
Additionally, it was decided to accelerate the payment of government capital into the ESM. The crucial point here is that unlike the EFSF (which has to fund itself exclusively in the market), when the ESM becomes fully operational it is due to hold a stock of EUR 80 bn in readily-available capital which it can use to fund its aid programs directly. That EUR 80 bn was due to be paid in by Eurozone governments in instalments over the course of five years. On Friday however, finance ministers agreed to accelerate the pay-in schedule so that it is completed in less than two years. This will put additional short-term funding pressure on sovereigns who will now need to find the money more quickly, and it should soon become apparent if any ratings actions flow from this.
Newswire reports suggest that Greece may now be preparing to default on Greek sovereign bonds which are governed by foreign law. Recall that holders of debt governed by Greek law have already been dealt with, whereas holders of foreign-law governed Greek debt have been given until April 4 to volunteer for a restructuring deal. The Greek parliament does not have jurisdiction over these bonds and so CACs cannot be used to enforce participation. However, Reuters reports that Eurozone finance ministers have granted Greece approval to simply refuse to pay holders of this debt if they do not come forward voluntarily.
Spain announced a budget outline on Friday, with more details due on Tuesday. The government has re-committed to the upwardly-revised 2012 deficit target of 5.3%, down from 8.5% in 2011.
Italy's Prime Minister Monti qualified some of his previously upbeat remarks, and now contends that "no one can say the euro zone crisis is totally over", but he declared the crisis "virtually over". He spoke after meetings in China with Chinese President Hu and the head of CIC where, according to Monti, the question of Chinese investment in Italy was a key talking point.
JPY
Japan's Finance Minister Azumi described Europe's decision to raise the EFSF/ESM funding ceiling as "a big step forward". Attention now shifts to the upcoming meetings of the IMF and World Bank on April 22, when IMF members debate whether to make more money available for crisis fighting, both in Europe and beyond.
The large manufacturer's Tankan index for Q1 came in unchanged at -4, despite consensus expectations that it would rise to -1.
Data released on Friday show that Japan did not carry out any FX intervention between Feb. 28 and Mar 28.
AUD
Building approvals in February fell -7.8% m/m in Feb, well below market expectations of a +0.5% m/m increase. Our Australian economics team notes that the decline was concentrated in NSW, where changes to the stamp duty system encouraged approvals to be fast-tracked in previous months, leaving a vacuum of approvals in the current month.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
2 April 2012 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
WORLD
China's official manufacturing PMI released over the weekend came in at 53.1 (cons. 50.8), substantially beating consensus opinion. The Australian dollar was the main beneficiary and climbed over 100 pips at the Asia open, although the rally eventually lost some steam after a very weak Australian building approvals report. The weekend PMI was all the more surprising given investors had been mentally prepared for a soft print after the weak private sector flash estimate released over a week ago. The weekend PMI is likely to continue to set a positive tone throughout the week, although US data releases such as ISM and non-farm payrolls will also be key. In particular, the data comes at a crucial moment for AUD given the RBA is scheduled to meet on Tuesday. Our Australia economics team expect no change to the cash rate and the latest Chinese numbers support this view - despite a loss of momentum in recent Australian economic data.
USDJPY has also started the week on a firmer note as Japan's new fiscal year gets underway. The prospect of yield-seeking yen-outflows over the weeks ahead should keep the pair on a trajectory towards our 3m target of 85.00. Japan's Tankan survey was slightly weaker than expected which gave USDJPY a nudge higher by slightly raising the risk of another round of BoJ easing. US data on Friday showed core PCE in line at +1.9% y/y while University of Chicago consumer confidence survey hit a 13-month high. BoE and ECB policy decisions are due this week and our economists expect no material change in policy settings.
EUR
Eurozone finance ministers agreed to raise the ceiling on the combined EFSF/ESM bailout facility to EUR 700 bn from EUR 500 bn previously. Although this option was the least ambitious of those on the table, it is still very much in line with consensus opinion, and so is unlikely to be market moving. Reuters reported that Germany, Finland, the Netherlands, Estonia and Slovenia opposed a larger increase in the fund.
Additionally, it was decided to accelerate the payment of government capital into the ESM. The crucial point here is that unlike the EFSF (which has to fund itself exclusively in the market), when the ESM becomes fully operational it is due to hold a stock of EUR 80 bn in readily-available capital which it can use to fund its aid programs directly. That EUR 80 bn was due to be paid in by Eurozone governments in instalments over the course of five years. On Friday however, finance ministers agreed to accelerate the pay-in schedule so that it is completed in less than two years. This will put additional short-term funding pressure on sovereigns who will now need to find the money more quickly, and it should soon become apparent if any ratings actions flow from this.
Newswire reports suggest that Greece may now be preparing to default on Greek sovereign bonds which are governed by foreign law. Recall that holders of debt governed by Greek law have already been dealt with, whereas holders of foreign-law governed Greek debt have been given until April 4 to volunteer for a restructuring deal. The Greek parliament does not have jurisdiction over these bonds and so CACs cannot be used to enforce participation. However, Reuters reports that Eurozone finance ministers have granted Greece approval to simply refuse to pay holders of this debt if they do not come forward voluntarily.
Spain announced a budget outline on Friday, with more details due on Tuesday. The government has re-committed to the upwardly-revised 2012 deficit target of 5.3%, down from 8.5% in 2011.
Italy's Prime Minister Monti qualified some of his previously upbeat remarks, and now contends that "no one can say the euro zone crisis is totally over", but he declared the crisis "virtually over". He spoke after meetings in China with Chinese President Hu and the head of CIC where, according to Monti, the question of Chinese investment in Italy was a key talking point.
JPY
Japan's Finance Minister Azumi described Europe's decision to raise the EFSF/ESM funding ceiling as "a big step forward". Attention now shifts to the upcoming meetings of the IMF and World Bank on April 22, when IMF members debate whether to make more money available for crisis fighting, both in Europe and beyond.
The large manufacturer's Tankan index for Q1 came in unchanged at -4, despite consensus expectations that it would rise to -1.
Data released on Friday show that Japan did not carry out any FX intervention between Feb. 28 and Mar 28.
AUD
Building approvals in February fell -7.8% m/m in Feb, well below market expectations of a +0.5% m/m increase. Our Australian economics team notes that the decline was concentrated in NSW, where changes to the stamp duty system encouraged approvals to be fast-tracked in previous months, leaving a vacuum of approvals in the current month.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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