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JPN Industrial Production Down 3.1%, Household Spending Declines 1.6% Yesterday evening, Japan revealed that household spending and industrial production faltered in March. Spending was down 1.6%, while production declined 3.1%, the largest decrease in nearly 5 years. The Japanese economy is being pressured by weaker demand from the US and now weaker spending domestically. UK Nationwide Housing Prices Dip 1.1% in March, GfK Consumer Confidence Fall to -24 The housing market in the UK continues to struggle. Prices fell 1.1% from March to April and were down 1% compared to last year. It's the first time since 1996 that the annual rate posted a decline. Mortgage approvals have dropped to record lows, and the housing sector is looking for further rate cuts from the Bank of England. GfK consumer confidence in the UK fell to -24, the lowest level since 1992. GBP/JPY - Pound Up on Risk Appetite
Despite falling after the news, the Pound recovered in NY trading. The Pound-Yen pair for instance rallied 250 pips after hitting a low near 203.75 reversing most of yesterday's losses. GBP/USD - Pound Reversed Yesterday's Losses
The Pound also managed to pare some of yesterday's steep losses vs. the Dollar as it climbed 200 pips in NY trading. GBP/USD trading has been choppy the last 2 weeks. During this time, the greenback managed to gain due to speculations of the Fed pause. EUR/JPY - Carry Trade Sentiments Return to Markets
The Euro rose against the Yen, as a strong open to US stocks helped bring risk appetite back into the markets after yesterday's bout of risk aversion. Carry trade sentiments helped the Euro overcome some weaker data in this pair. EUR Flash Annual CPI Cools Slightly to 3.3% In Europe, a flash estimate of CPI showed the annual pace decreasing to 3.3% from March's 3.6% rate. This is a welcome sign for the ECB as it has made clear that price stability is its chief concern when discussing monetary policy. EUR Economic Sentiment and Business Climate Decline in April In other data from the Euro-zone, the Economic sentiment indicator which combines several confidence surveys, decreased to 97.1. Whereas consumer confidence stayed steady, confidence in services, manufacturing, retail sales and construction all declined. A second release, the Business climate indicator, fell to a measure of 0.44 from 0.79. US GDP Grows 0.6% in 1st Quarter, ADP Employment Up 10K The US economy grew by 0.6% in the 1st quarter, which was higher than economists' expectations. However, the report revealed weaker consumer spending, continuing decline in the housing market and reduced business spending. The ADP employment report showed that 10.000 jobs were added to the economy in April. Although this beat expectations of more job losses, it does not suggest recovery. This can simply be a pause in employer's decisions to hire or cut because they need to reassess the future prospects of the US economy. CAN GDP Shows Negative Reading For Month of February The Canadian economy saw growth decrease by 0.2% in February compared to January. The result surprised on the downside as sales of vehicles and building supplies weakened. Manufacturing weakness was also a major contributor to the decline. CAN Producer Prices Surge, Can Stoke Inflation In a second release producer prices in Canada were up 1.7%, with raw materials surging 6.6%. Much like other central banks of developed nations, the Bank of Canada is now facing the challenge of dealing with reflation, a combination of recessionary and inflationary risks. USD/CAD - Loonie Gains on Data
The Loonie gained on the greenback following the news as the inflation data overwhelmed the GDP report. However, the pair found support near 1.0040 and bounced back and entered a period of choppy trading prior to the FOMC meeting. US FOMC Cuts Rates by 25 Basis Points Finally, at 2:15PM EST today, the (Federal Open Market Committee) FOMC finished its 2-day discussion and voted to cut rates by 25 basis points to 2.00%. The committee signaled that it may stay on the sidelines and let its previous rate cuts work their way into the economy. Also the Fed strengthened their language regarding inflation. EUR/USD - Euro (& Others) Climb vs. Dollar Post FOMC
The Euro-Dollar has been trading in tight ranges ahead of today's FOMC announcement. Following the rate cut, the pair initially fell to 1.5540, then recovered to test 1.56. The Dollar was also lower against its other rivals in the 30 minutes following the release. Upcoming Releases Tonight and tomorrow we get data on manufacturing from Australia, the UK and the US. The US will also post jobless claims, and figures on personal incomes and spending. |
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