28 February 2011 at 6:41 GMT
The Asian session saw an early dip for currencies as equity markets opened in the red. However sentiment switched just before lunch as the Shanghai index pushed into the black, possible helped by Warren Buffet’s weekend comments.
Geopolitical developments over the weekend saw Tunisia’s PM resign follow a wave of street protests, evacuations of foreign personnel continues in Libya while Libyan leader Gaddafi dismissed new UN sanctions and vowed to defeat protestors. Warren Buffet, in his message to shareholders, said the US’s best days possibly lie ahead and that Americans should ignore naysayers and prophets of doom (us?).
Data-wise there was nothing to excite, though Japanese industrial production failed to match expectations coming in at +2.4% m/m versus 4.0% expected. Note January trade data missed the mark so this confirms the slow January month. We will need to wait until next month to see if it was just a temporary New Year hangover.
Looking ahead, today in Europe sees German import prices, Sweden’s PPI, retail sales and trade balance along with Euro-zone CPI. The North American session closes off the month with Canada’s GDP for December, US personal income/spending, Chicago PMI, pending home sales, Dallas manufacturing activity and speeches from Fed’s Dudley and Rosengren. It is a busy week for events and data as we switch into a new month – ISM/PMI data, RBA meeting, Bernanke’s testimony and US employment report to name but a few.
Friday, the dollar had a slight respite from its sell-off of the week with other currencies coming under pressure for a change. GBP was soft as Q4 GDP data was revised lower (-0.6% q/q, +1.5% y/y from -0.5%/+1.7% resp.) and the overhang from the earlier gloomy consumer confidence print. EUR did not fare much better as the Irish elections got under way (the weekend result as expected with the governing party decimated – now markets will focus near-term on any re-negotiation of the EU/IMF bailout deal).
Month-end portfolio hedging flows are possibly suggesting heavy USD demand later Monday. Oil prices traded steadily as markets took comfort from Saudi assurances to fill any Libya output gap. As a result the CAD outperformed the USD with USDCAD hitting a 3-year low below 0.98.
On the US data front, releases were mixed with Q4 GDP was also revised lower to +2.8% q/q (annualized) with a downward revision to personal consumption while Michigan confidence rose to a 3-year high at 77.5 from 75.1 last and beating forecasts of 75.5. Wall St stopped the rot as oil prices eased off, with the first daily gain in four days but still finished lower on the week. The DJIA adding 0.51%, the S&P 1.06% and the Nasdaq +1.58%.
Have a great and successful week.
Economic Data Highlights
- US Q4 GDP Revision out at +2.8% q/q (annualized) vs. 3.3% expected and 3.2% prior
- US Q4 Personal Consumption out at 4.1% vs. 4.2% expected and 4.4% prior
- US Feb. Michigan Confidence out at 77.5 vs. 75.5 expected and 75.1 prior
- NZ Jan. Trade Balance out at NZ$11 mln vs. –NZ$25 mln expected and revised –NZ$264 mln prior
- JP Feb. Nomura/JMMA Manufacturing PMI out at 52.9 vs. 51.4 prior
- AU Feb. TD Securities Inflation out at +0.2% m/m, 3.6% y/y vs. 0.4%/3.4% prior resp.
- JP Jan. Industrial Production out at 2.4% m/m, 4.7% y/y vs. 4.0%/6.0% expected and 3.3%/4.9% prior resp.
- JP Jan. Retail Trade out at 4.1% m/m, 0.1% y/y vs. 2.7%/-1.5% expected and revised -4.2%/-2.1% prior
- JP Jan. Lge Retailers’ Sales out at -0.7% y/y vs. -1.0% expected and revised -1.7% prior
- AU Q4 Inventories out at +0.7%q/q vs. -0.5% expected and revised -0.9% prior
- AU Jan. Private Sector Credit out at 0.3% m/m, 3.3% y/y vs. 0.3%/3.2% expected and 0.2%/3.4% prior resp.
- NZ Feb. NBNZ Business Confidence out at 34.5 vs. 29.5 prior
- NZ Feb. NBNZ Activity Outlook out at 36.6 vs. 34.5 prior
- JP Jan. Housing Starts out at +2.7% y/y vs. 5.1% expected and 7.5% prior
- JP Jan. Construction Orders out at -10.7% y/y vs. +13.1% prior
Upcoming Economic Calendar Highlights
(All Times GMT)
- GE Import Price Index (0700)
- Sweden PPI (0830)
- Sweden Retail Sales (0830)
- Sweden Trade Balance (0830)
- EU Euro-zone CPI (1000)
- US Fed’s Dudley to speak (1330)
- CA Current Account (1330)
- CA GDP (1330)
- US Personal Income/Spending (1330)
- US PCE Deflator (1330)
- US Fed’s Rosengren to speak (1345)
- US Chicago PMI (1445)
- US Pending Home Sales (1500)
- US Dallas Fed Manufacturing Activity (1530)