The USD lost some ground in month end trading, though ended off the lows as UST yields moved higher with eyes on Biden’s infrastructure proposals.
- US Mar ADP private employment +517k vs 550k exp.
- US Mar Chicago PMI rose to 66.3 from 59.5 vs 61.0 exp.
- US Feb pending home sales -10.6 vs -3.0% exp.
The USD fell across the board through the European morning in what looked most likely to be end of month/end of quarter business. GBP was the best performer, with GBP/USD rising from 1.3720 to 1.3790, but the USD lost ground across the board, with EUR/USD rising from 1.1710 to 1.1745 and USD/JPY falling back from 110.90 to 110.60. The slight GBP outperformance but otherwise generally even USD decline suggests this was not a risk related move. EUR/NOK continued its downtrend hitting its lowest level since February 2020, with lows below 10.00.
News had no obvious impact. Data included UK Q4 GDP being revised up to 1.3% from 1.0%, provisional Eurozone CPI showing the expected 1.3% y/y rise in March, up from 0.9% in February, but the core rise was smaller than expected, with HICP ex-food and energy coming in at 1.0% against 1.2% expected. There was a slightly smaller than expected 8k decline in German unemployment. French consumer spending was weaker than expected in February, showing no change against a 2.0% rise expected after the 4.9% January decline.
The BoJ announced plans to reduce the total amount and frequency of its bond purchases in April from March following its decision earlier this month to widen the target range of the 10-year government bond yield. The BOJ will buy short- to long-dated bonds four times next month, compared with five times in March, and will buy super-long bonds only once, compared with twice in March, it said. As a result, the BOJ's buying of conventional JGBs is expected to fall by about 9% to 5.9 trillion yen ($53.33 billion) in April, compared to 6.45 trillion yen in March.
The USD extended declines a little early in the US session, with the riskier currencies leading the way before a late correction as UST yields picked up after some early slippage, the market eyeing Biden’s infrastructure proposals. The CAD was a strong performer, but its gains came some time after the stronger than expected 0.7% rise in Canadian January GDP, suggesting this was not the main cause. USD/CAD fell as low as 1.2540 before correcting. Most pairs only marginally exceeded their European morning lows versus the USD, though this was enough to see GBP/USD reach 1.38. EUR/USD peaked at 1.1760 but erased the bulk of its gains in late trade, as EUR/GBP moved close to .85. AUD saw late losses too, below .76.
US ADP employment data was slightly weaker than expected at 517k against the 550k market median forecast, and pending home sales showed a sharp 10.6% decline in February, likely weather related. The Chicago PMI saw a strong bounce however.
Asia FX and News
-About 15M J&J Vaccine Doses Ruined by U.S. Factory Mix-up ~ NYT
-Japan Seeks to Place Three Regions Under New Virus Restrictions ~ BBG
-Canada’s Ontario to Be in Lockdown for 28 Days ~ CBC
- President Biden’s $2.25 trn infrastructure plan was largely in line with expectations. Dollar was modestly lifted, especially against the commodity currencies. Anitpodeans softness could also be due to risk-squaring ahead of the long weekend. CAD was additionally weighed by 28-day Ontario lockdown news though CAD still trailed losses in the anitpodeans. AUD/USD slipped below YTD lows. NZD/USD dipped to test its 2021 lows.
- Australia data was mixed and had little FX impact. Retail sales fell slightly less than expected in February even after an upward revision to January. Trade surplus was narrower than expected in February though still historically large. The massive beat in January also modestly revised lower. Exports unexpectedly dipped while imports were stronger than expected. Housing prices rose 2.8% in March, the fastest increase since October 1988.
- JPY firmer against all, even as US futures were flat while US yields correct early gains from Biden. USD/JPY eased to 110.60. Osaka and 2 other prefectures are set for new virus measures from April 5 for a month. EUR/USD and GBP/USD a shade softer as USD broadly gained ahead of the European session.
00:50 GMT - JP: Tankan large mfg (1Q) 5 Index (Mkt: -1 Prev: -10)
01:30 GMT - AU: Exports (Feb) -1% m/m(Mkt: 1 Prev: 6)
01:30 GMT - AU: Retail Sales (Feb F) -0.8% m/m (Mkt: -1.1 Prev: -0.3)
01:30 GMT - AU: Imports (Feb) 5% m/m (Mkt: 4 Prev: -2)
01:30 GMT - AU: Trade Balance (Feb) 7529 Mn AUD (Mkt: 9872 Prev: 9616)
01:30 GMT - AU: Home Loans Value (Feb) -0.4% m/m (Mkt: 3 Prev: 10.5)
Still to be released
ALL DAY - IT: Budget Balance (Mar) Bn (Prev: -10.2)
06:00 GMT - JP: Vehicle Sales (Mar) % (Prev: -2.2)
06:30 GMT - AU: Commodity Index (Mar) Index (Prev: 113.3)
07:00 GMT - DE: Retail Sales (Feb) % (Mkt: 2 Prev: -6.5)
07:30 GMT - CH: HICP (Mar) % y/y (Prev: -0.4)
07:30 GMT - CH: CPI (Mar) % y/y(Mkt: -0.3 Prev: -0.5)
07:30 GMT - SE: Manufacturing PMI (Mar) Index (Mkt: 62.5 Prev: 61.6)
08:15 GMT - ES: Manufacturing PMI (Mar) Index (Mkt: 56 Prev: 52.9)
08:30 GMT - CH: Manufacturing PMI (Mar) Index (Mkt: 64.5 Prev: 61.3)
08:45 GMT - IT: Manufacturing PMI (Mar) Index (Mkt: 59.8 Prev: 56.9)
08:50 GMT - FR: Manufacturing PMI (Mar F) Index (Mkt: 58.8 Prev: 58.8)
08:55 GMT - DE: Manufacturing PMI (Mar F) Index (Mkt: 66.6 Prev: 66.6)
09:00 GMT - EU: Manufacturing PMI (Mar F) Index (Mkt: 62.4 Prev: 62.4)
09:30 GMT - UK: CIPS / Markit Manufacturing PMI (Mar F) % (Mkt: 57.9 Prev: 57.9)
13:30 GMT - CA: Building permits (Feb) % (Mkt: -1.4 Prev: 8.2)
13:30 GMT - US: Initial Claims (Mar 27th) K (Mkt: 675 Prev: 684)
14:45 GMT - US: Markit Manufacturing PMI (Mar F) Index (Mkt: 59.2 Prev: 59)
15:00 GMT - US: Construction Spending (Feb) % (Mkt: -1 Prev: 1.7)
15:00 GMT - US: ISM Manufacturing (Mar) 4cast: 61 Index (Mkt: 61.5 Prev: 60.8)
No Significant Events.