US Markets

Last night saw US bourses ending lower despite generally firmer data. Looking back, the DJIA looks likely to close the quarter lower. The S&P 500 and Nasdaq are relatively unchanged when compared to the start of the year. Unemployment claims surprised, printing at 311k versus 326k, suggesting an improvement in labour conditions. Fourth quarter GDP growth was revised up from 2.4% to 2.6%. Although this is slightly lower than expected, exports showed strong increases. Pending home sales continued their slide from last month with another 0.8% drop. It is likely the market will look to next week’s higher impact economic reports like ISM and non-farm payrolls for a clear direction into the second quarter.


The USD traded mixed against the majors, appreciating against the euro and the yen while weakening against the commodity currencies and sterling. UK retail sales far exceeded expectations, coming in with an increase of 1.7% vs. 0.5% as compared to last month. This drove cable much higher and continued its stellar performance this week, rising in every session and breaking through the 1.66 levels overnight. On the contrary, with no pertinent economic data releases, the euro has lost some of it shine. Coming off its March high of 1.3966, it seems likely to test the 1.37 levels. Excellent trade numbers from New Zealand helped the Kiwi trade past its previous high of 0.8676, last seen in April last year. Its trade balance came in at 818 million, beating the forecast of 595 million and showing a stark improvement from last month. The next level eyed will be the high seen in 2011, above the 0.88 levels. The Aussie and Loonie also displayed strong gains throughout the week, rising in successive sessions since the end of last week. Earlier this morning, Japan released its February inflation figures, which were in line with expectations of 1.3%, unchanged from the previous month. However, household spending saw a decrease of 2.5% from last month. This raises concern for consumer appetite as Japan will be raising its sales tax rise from 5% to 8% starting next month. The effect of this tax will be watched closely by the Japanese government, and market players will be questioning the decision to inject further stimulus into the economy in the months ahead.


As the commodity currencies strengthen, gold continues to slide and is trading below the 1,300 mark while crude oil WTI is holding firm above the $100 level. For now, this points towards traders welcoming risk back to the market in the near term. Looking forward, next week will see the close of the month and quarter with a full economic calendar from the various major economies, suggesting a busy trading week ahead.

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