Comments from President Trump sparked a number of late afternoon spikes in currency markets that may continue to impact what has already been shaping up to be a big day for Asia Pacific trading. The President spoke positively about Fed Chair Yellen and indicated he hasn’t decided whether or not to keep her on when her term ends next year, a change from the campaign when he indicated plans to fire her. He also reversed course on interest rates, indicating he would prefer low rates (which would help his economic program) and took personal blame for the high USD saying the gains are due to people having confidence in him.
These comments appear to have had the desired effect of knocking the dollar back down and sparking rallies in gold and most major currencies. Gold and the Japanese Yen have already been trading upward on recognition of rising political risks both domestic and external.
Meanwhile, crude oil dropped despite larger than expected drawdowns for oil, distillates and gasoline in this week’s DOE inventory report. Oil had rallied after the positive API report the night before and after several days of gains for black gold, it looks like some traders used the DOE news as an excuse to take profits ahead of the Easter weekend.
The Canadian Dollar had a relatively positive day despite the decline in oil prices. The Loonie benefitted from President Trump’s comments along with other currencies but it had already been attracting interest form today’s Bank of Canada statement. The hold decision was as expected but traders responded favourably to Governor Poloz dropping references to a possible rate cut and shifting firmly into neutral. He indicated the Canadian economy has been benefitting from higher spending in the oil and gas and home sectors, although he did warn that house price increases of 30% plus in the Toronto market are unsustainable. The Bank of Canada raised its 2017 GDP growth forecast to 2.6% form 2.1% which was also seen as positive by the street.
Commodities, currencies and indices, particularly markets and shares related to resources, could be particularly active today. The two main events are China trade figures which could give a sense of resource demand, and the Australian employment report. Australia jobs are widely expected to rebound by 20K after falling by 6K last month. The full-time/part-time split which saw a big swing
to full time job creation last month may also attract attention. Earlier in the day, New Zealand markets look to be in the spotlight around manufacturing PMI and food price reports.
Tomorrow morning brings US producer prices and we could see more positioning ahead of the weekend with US retail sales and consumer prices due out on the holiday Friday morning.
There have been no major announcements after the US close today
Significant announcements released overnight include:
Bank of Canada interest rate 0.50% no change as expected
Canada Teranet house prices 13.5% vs previous 13.4%
US DOE crude oil inventories (2.1 mmbbls) vs street (1.5 mmbbls)
US DOE gasoline inventories (2.9 mmbbls) vs street (1.0 mmbbls)
US DOE distillate inventories (2.1 mmbbls) vs street (1.0 mmbbls)
UK jobless claims 25K vs previous (11K)
UK 3M employment change 39K vs street 70K vs previous 92K
UK unemployment rate 4.7% as expected
UK average weekly earnings 2.3% vs street 2.2%
Upcoming significant economic announcements include:
(Note: 11:30 am in Sydney/Melbourne is currently 1:30 pm in Auckland, 4:30 pm in Vancouver, 7:30 pm in Toronto/Montréal, 12:30 am in London and 8:30 am in Singapore)
7:30 am AEDT NZ REINZ house sales previous (14.2%)
8:30 am AEDT NZ manufacturing PMI previous 55.2
8:45 am AEDT NA food prices previous 0.2%
10:00 am AEDT Singapore GDP street 2.6%
TBA China trade balance street $12.5B
TBA China imports street 15.5% vs previous 38.1%
TBA China exports street 4.3%
11:30 am AEDT Australia employment change street 20K vs previous (6K)
11:30 am AEDT Australia full time jobs previous 27K
11:30 am AEDT Australia part time jobs previous (33K)
11:30 am AEDT Australia unemployment rate street 5.9%
7:00 am BST Germany consumer prices street 1.6%
8:30 am EDT Canada new house prices street 3.1%
8:30 am EDT Canada manufacturing sales street (0.7%)
8:30 am EDT US producer prices street 2.4%
8:30 am EDT US core PPI street 1.8%
8:30 am EDT US jobless claims street 245K
10:00 am EDT US consumer sentiment street 96.5
10:30 am EDT US natural gas street 11 BCF