16 February 2011 at 6:42 GMT
Risk appetite saw a minor uptick in the Asian session Wednesday with equity markets registering small gains (Shanghai Composite holding near 2-month highs after yesterday’s softer CPI data), despite it being a slow affair on the data front.
GBP ignored a rather poor print for the Nationwide consumer confidence index, which slumped to 47 (a near 2-year low) from an upwardly-revised 54 the previous month. VAT rate hikes, public spending cuts and possible job losses obviously weighing on sentiment in the UK. Let’s see what BOE Governor King can come up with in the quarterly inflation report. AUD underperformed amid market rumours of a pending downgrade for Australian banks.
During the European session, focus will be on the UK with unemployment and the Bank of England’s quarterly inflation report the major highlights. The North American session features Canada’s leading indicators, international securities transactions and manufacturing sales. From the US we see housing starts, building permits, PPI, industrial production and capacity utilization.
Yesterday, currency markets were broadly rangebound with the EUR enduring a number of push/pull effects. German GDP was a minor disappointment (as were other EMU numbers) but the EUR’s fall was short-lived following a slightly better ZEW survey. UK CPI came in at 4.0% y/y, double the BOE’s target level, yet BOE governor King still insists that these effects are temporary and would wish to “look through” the data. He is, however, open to the prospect of rate hikes in the future. This gave GBP another nudge higher to one-week highs. Sweden’s Riksbank raised rates 25bp to %, as expected, but was more hawkish on future rate hikes than the market had been expecting.
On the US data front, advance retail sales were below expectations, up 0.3% versus 0.5% expected and ex-autos/gas an even less +0.2% m/m. The first regional manufacturing survey for February, the Empire Manufacturing survey, matched upbeat expectations with a rise to 15.43 from 11.92 with a more mixed report seen in the details – notably a softer employment sub-category. Business inventories were slightly better than expected, up 0.8% m/m while the NAHB housing market index flat-lined at 16. Comments from Fed members included Pianalto saying jobs growth remained anaemic while NY’s Cumming said inflation was likely near the low point in the cycle while rising commodity prices point to stronger global demand.
Economic Data Highlights
- US Feb. Empire Manufacturing out at 15.43 vs. 15.0 expected and 11.92 prior
- US Jan. Import Price Index out at +1.5% m/m, +5.3% y/y vs. 0.8%/4.4% expected and revised 1.2%/5.1% prior resp.
- US Jan. Advance Retail Sales out at +0.3% m/m vs. 0.5% expected and revised 0.5% prior
- US Jan. Retail Sales ex-autos/gas out at +0.2% m/m vs. 0.4% expected and revised 0.1% prior
- US Dec. Net Long-term TIC Flows out at $65.9 bln vs. $40.0 bln expected and revised $85.1 bln prior
- US Dec. Business Inventories out at +0.8% m/m vs. 0.7% expected and revised 0.4% prior
- AU Dec. Westpac Leading Index out at +0.8% m/m vs. flat prior
- JP Dec. Tertiary Industry Index out at -0.8% m/m vs. -0.6% expected and revised +0.5% prior
- AU Feb. DEWR Skilled Vacancies out at -1.2% m/m vs. revised -2.1% prior
- UK Jan. Nationwide Consumer Confidence out at 47 vs. 50 expected and revised 54 prior
Upcoming Economic Calendar Highlights
(All Times GMT)
- UK Jan. Claimant Count Rate (0930)
- UK Avg. weekly Earnings (0930)
- UK ILO Unemployment Rate (0930)
- UK BOE Quarterly Inflation Report (1030)
- US MBA Mortgage Applications (1200)
- CA Leading Indicators (1330)
- CA Int’l Securities Transactions (1330)
- CA Manufacturing Sales (1330)
- US Housing Starts (1330)
- US Building Permits (1330)
- US PPI (1330)
- US Industrial Production (1415)
- US Capacity Utilization (1415)