FRX: Pound to Look Past GDP to Money Supply Data with Rates in Focus
New Zealand Trade Surplus Narrows as Imports Soar
Japan’s Jobless Rate Hit 2-Year Low Before Earthquake
Critical Levels
The Euro advanced in overnight trade, erasing losses sustained early in the session to add 0.3 percent against the US Dollar. The British Pound likewise advanced, touching as high as 1.6042 against the greenback, but prices reversed just ahead of the opening bell to erase most of the advance. We are looking to enter short EURUSD, GBPUSD, AUDUSD and NZDUSD in the days ahead.
Asia Session: What Happened
New Zealand’s Trade Balance surplus shrank for the third month to NZ$758 million in the year through February, the smallest since July of last year, as imports continued to outpace exports. Inbound shipment grew at an annual pace of 22.9 percent, the fastest since September 2008, potentially reflecting the sharp rise of the trade-weighted New Zealand Dollar in the 24 months through December 2010.
Japan’s Jobless Rate fell to 4.6 percent in February, the lowest in two years, while the ratio of available jobs to seeking applicants rose to 0.62. Labor force participation also narrowly increased to 59 percent, suggesting Japan’s labor market was showing genuine signs of improvement before being struck by the Tohoku earthquake. Unfortunately, with the total fallout from the disaster still uncertain, these figures are largely moot until it becomes clear if the momentum they reveal will be carried over into the months ahead.
Euro Session: What to Expect
With rate hike expectations in focus, UK Money Supply figures may overshadow the final revision of fourth-quarter Gross Domestic Product figures for the British Pound. Traders will be particularly concerned with the “core” M4 reading excluding OFCs (so-called “other financial corporations”), an indicator closely it is monitored by the Bank of England. The metric put money supply growth at 4.9 percent in January and anything meaningfully above that may help to rebuild monetary tightening bets and help underpin the UK unit over the near term.
Turning to the Continent, the preliminary German Consumer Price Index reading is on tap, with expectations calling for inflation in the Euro Zone’s top economy to accelerate to 2.2 percent in March. The outcome may not prove substantially market-moving considering the likelihood of an April rate hike from the European Central Bank has been thoroughly priced in for some time now (according to a Credit Suisse gauge tracking traders’ outlook as derived from overnight index swaps).
US economic data will come into focus later in the session, Consumer Confidence figures expected to show that sentiment for the first in five months in March. The outcome reinforces the recent cooling in key indicators tracking the health of the world’s top economy, threatening to weigh on risk-sensitive currencies and boost the safety-linked US Dollar.
