Wall St finished the last day of March in negative territory with the S&P 500 and the NASDAQ both falling 1.4% while the Dow Jones was 1.5% lower. This took the S&P 500’s first quarter to -4.9%,the worst quarter in 2 years. Yesterday’s headlines regarding an oil reserve release from the U.S saw crude prices fall 6.4% to $100.8 a barrel while bond markets were relatively unchanged. The AUD/USD traded to a low of .7471 before recovering slightly to .7485 in late trade.
Continuing the theme of higher inflation in Europe, French CPI for March came in at +1.6% MoM and +5.1% YoY, higher than expectations of 1.5% and 4.9% respectively. Released a little later, Italian CPI was softer than expected at 2.6% MoM and 7.0% YoY, both lower than expectations by 0.2%. Also out of the continent were dovish comments coming from European Central Bank (ECB) Chief Economist Philip Lane who said that the ECB must remain data dependent and for optionality to be two-sided, stressing that the ECB must be prepared to adjust settings if the Ukraine conflict impacts on growth.
US weekly jobless claims data was mixed with initial claims rising slightly to 202k to come in higher than estimates of 196k while continuing claims fell to $1.307M to come in lower than estimates of $1.340M. February Core PCE (Personal Consumption Expenditure) was 0.4% MoM as expected with the YoY number at 5.4% compared to expectations of 5.5%. Personal Income was 0.5% as expected with Personal Spending at +0.2% compared to forecasts of +0.5%. Across the border, Canadian GDP for February was +0.2% MoM as expected with the YoY number at 3.5% compared to expectations of 3.6%. No reaction to the various data points.
Headlines from Putin who said that as of April 1, foreign buyers of Russian gas would need to open Russian bank accounts and pay in roubles and active contracts would be halted if this did not occur. Energy prices rebounded out of the lows with West Texas Intermediate (WTI) up around 2% from the lows though remained down around 3.5%.
EUR/USD sliding to lows of 1.1068 in response to the comments out of Russia. Risk was slightly weaker as the offshore session got underway with the USD generally firmer across the board. AUD/USD fell to early lows near 0.7470 with NZD/USD down towards 0.6940 while USD/JPY hit 121.34 lows. GBP/USD the exception as it moved up to highs bear 1.3150.
The USD remained firm with NZD/USD falling below 0.6930 while GBP/USD moved back towards the lows. USD/CAD up to 1.2533 highs in the move. Mixed flows over the NY afternoon with USD/CAD the biggest mover as it fell to new lows of 1.2464. The USD was modestly firmer with NZD/USD and EUR/USD both making new lows in late trade.
Currency ranges over the last 24 hours
A busy day to round out the week particularly from the U.S where we get Institute for Supply Management (ISM) and employment data. The US employment report for March may show a persistent strength in the labour market, reflecting a positive impulse from re-opening post the Omicron wave. Market focus may be on the average hourly earnings figures for any signs of a softening trend.
The ISM manufacturing Purchasing Managers Index (PMI) for March – a coincident indicator of growth – should show strong activity persisting. The preliminary Information Handling Services (IHS) Markit measure for the month showed improvement. Three of the four Fed regional measures released have made sharp monthly gains.
The AUD/USD traded in a .7471/.7528 range yesterday with offering interest still expected ahead of .7550 while demand should materialise as we approach .74c.
• JP – Q1 Tankan Survey
• AU – February Home Loans
• CH – March Caixin Manufacturing PMI
• FR, GE, EU, UK – March Manufacturing PMI
• EU – March CPI
• US – March employment report
• US – March Manufacturing PMI
• US – March ISM Manufacturing