Article Highlights

  • AU AIG services index down from 54.5 to 49.0
  • Japan’s household spending (y/y) slips by 1.2% vs. -0.3% expected and previous
  • Japan’s national core CPI (y/y) up by 0.1% vs. 0.0% expected, -0.2% previous
  • Japan’s Tokyo core CPI (y/y) down by 0.3% vs. 0.2% expected, -0.3% previous
  • Japan’s unemployment rate reduced to 3.0% as expected vs. 3.1% previous
  • NZ ANZ commodity prices rises by 2.0% vs. 0.1% decline in January
  • China’s Caixin services PMI slips from 53.1 to 52.6 vs. 53.3 expected
  • Japan’s consumer confidence dips from 43.2 to 43.1 vs. 43.7 expected
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The dollar’s price action was a mixed bag of nuts, as profit-taking ahead of the weekend dragged on it against the European and low-yielding currencies, while it continued to rake in pips against the comdolls.

Major Events:

Japan’s inflation numbers – Data released earlier showed that consumer prices have risen, but are still light years away from where the central bank wants them to be.

Japan’s headline consumer prices improved by 0.1% in January. This is better than the 0.2% decline in December. On an annualized basis, this translates to a growth of 0.4% for the month, which also higher than December’s 0.3% and is in line with analysts’ expectations.

The core reading has more cause for celebration. Prices excluding fresh food prices shot up by 0.1% in January, which marks its highest reading since December 2015. The government also released a new index which strips both food prices AND energy prices. The report showed a 0.2% uptick from a year earlier, and suggests that the yen’s declines are pushing up imported goods prices.

Meanwhile, Tokyo’s core CPI, widely considered as a leading indicator and is less affected by energy prices, showed a 0.3% decline in February. Duhn duhn duhn.

Overall, the numbers show just how far BOJ Governor Kuroda and his gang have to go to achieve their 2.0% inflation growth. See, rising protectionism from Japan’s major trading partners, as well as tepid economic growth, are hindering companies from raising wages, which then limits consumer price increases. Do these numbers mean that we’ll see more stimulus measures from the BOJ?

Shaky risk sentiment – The Asian bourses took cues from their U.S. counterparts and clocked in losses today. If you recall, U.S. equities took a breather from their record gains ahead of FOMC members’ speeches scheduled on Friday U.S. time and the weekend.

Of course, it also didn’t help that all the hoopla over Attorney General Jeff Sessions and his possible contact with Russia during the campaign period continue to hit the newswires. In the latest episode, Sessions has removed himself from involvement in any investigations related to the 2016 presidential race.

In any case, Nikkei is currently down by 0.79% while Australia’s ASX 200 is down by 0.81%. Meanwhile, Hang Seng slipped by 0.65% and the Shanghai index dropped by 0.62%.

Market Movers:

USD – The dollar’s price action was a mixed bag of nuts, as it lost to its fellow low-yielders and the euro, but gained against the comdolls.

EUR/USD is up by 19 pips (+0.18%) to 1.0518 and USD/JPY slipped by 42 pips (-0.37%) to 114.08 while AUD/USD is down by another 95 pips (-1.24%) to .7561 and NZD/USD is also down by 27 pips (-0.38%) to .7034.

Watch Out For:

  • 8:00 am GMT: German retail sales (0.2% expected, -0.9% previous)
  • 9:15 am GMT: Spanish services PMI (55.1 expected, 54.2 previous)
  • 9:45 am GMT: Italian services PMI (53.1 expected, 52.4 previous)
  • 9:50 am GMT: French final services PMI expected to remain at 56.7
  • 9:55 am GMT: German services PMI expected to remain at 54.4
  • 10:00 am GMT: Euro Zone services PMI expected to remain at 55.6
  • 10:30 am GMT: U.K. services PMI (54.2 expected, 54.5 previous)
  • 11:00 am GMT: Euro Zone retail sales (0.3% expected, -0.3% previous)

See also:

U.S. Session Recap
London Session Recap

Bonnie and Clyde, peanut butter and jelly, Kanye West and Kanye West. Some things just go well together.

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