Article Highlights

  • U.K. Gfk consumer confidence remains at -6 vs. -7 reading expected
  • Japan’s household spending (y/y) down by 3.8% vs. 1.6% dip expected, 1.2% decline previous
  • Japan’s national core CPI (y/y) up by 0.2% as expected vs. 0.1% uptick in January
  • Tokyo’s core CPI (y/y) down by 0.4% vs. 0.2% slip expected, 0.3% decline previous
  • Japan’s unemployment rate up by 2.8% vs. 3.0% expected and previous
  • Japan’s preliminary industrial production up by 2.0% vs. 1.3% expected, -0.4% previous
  • New Zealand’s ANZ business confidence drops from 16.6 to 11.3 in March
  • Australia’s private sector credit up by 0.3% vs. 0.5% expected, 0.2% previous
  • China’s manufacturing PMI up from 51.6 to 51.8 in March vs. 51.7 in February
  • China’s non-manufacturing PMI pops up from 54.2 to 55.1 in March
  • Japan’s housing starts (y/y) slips by 2.6% after shooting up by 12.8% in January
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Risk-taking was the name of the game during the Asian session, as a surge of economic reports fired up the major currencies all over the charts.

Major Events:

China’s manufacturing data – Data from China earlier today saw the manufacturing and services industries expanding further in March.

China’s official manufacturing PMI clocked in at 51.8 in March, a smidge higher than February’s 51.6 reading. The official services PMI also popped up, this time from 54.2 to 55.1.

That’s the fastest reading since April 2012, yo! This is good news especially since the share of the services sector in China hit a record 51.6% of the GDP in 2016.

For newbies out there, you should know that readings above 50.0 indicate industry expansion.

Overall, the numbers support speculations that the world’s second largest economy is off to a good start for the year. If you recall, Beijing is targeting a GDP range of 6.5% to 7.0% in 2017.

Japan’s inflation numbers – The BOJ’s uphill battle continues! Japan dumped data earlier today and it didn’t bode well for the central bank’s mandate.

The national CPI came in at 0.2% from a year earlier, which may mark the fastest annual gain in almost two years but is still waaay lower than the BOJ’s 2.0% target. Tokyo’s core CPI also didn’t help, as the leading indicator dropped by another 0.4% in March after slipping by 0.2% in February.

In other news, household spending dipped by 3.8% in February when analysts were only expecting a 1.6% decline after January’s 1.2% decrease.

The unemployment rate was the only silver lining, clocking in at 2.8% when market geeks expected it to remain at 3.0% in February.

The persistent weakness of inflation and further dips in household spending tell us that a tighter labor market is not necessarily putting upward pressure on consumer prices.

And since much of the uptick can be attributed to higher oil prices, today’s releases underscore the BOJ’s challenge to boost inflation on the back of faster wage growth.

Overall risk appetite – The last trading day of the quarter ended on a sweet note for Japanese investors, as Japan’s weak inflation reports and the dollar’s rebound from the U.S. session dragged on their local currency and pushed equities higher.

China’s better-than-expected PMIs and Uncle Sam’s upward revision to its GDP didn’t hurt either. Just before the break Nikkei was up by 0.55% and the Shanghai index was up by 0.29% even as Hang Seng dropped by 0.49% and Australia’s A SX slipped by 0.15%.

Market Movers:

JPY – Better-than-expected U.S. data, overall risk appetite, and the last trading day do Japan’s fiscal year dragged the yen lower across the board.

USD/JPY popped up by another 29 pips (+0.26%) to 112.08, EUR/JPY shot up by 25 pips (+0.21%) to 119.65, and AUD/JPY inched 14 pips (+0.16%) higher to 85.66.

GBP – The pound’s rally continued during the early Asian session but soon lost its legs just before the break. There were no catalysts to drag on the U.K.’s currency though profit-taking might have factored in among the Asian session traders.

GBP/USD shot up to 1.2508 before trading at 1.2478 while GBP/JPY hit 140.10 before going back down to 139.85. EUR/GBP exhibited a similar V-pattern trading as it capped the session at .8555 after dipping to .8545.

Watch Out For:

  • 6:00 am GMT: German retail sales (0.7% expected, -0.8% previous)
  • 6:00 am GMT: U.K. Nationwide house price index (0.3% expected, 0.6% previous)
  • 6:45 am GMT: French consumer spending (0.3% expected, 0.6% previous)
  • 6:45 am GMT: French preliminary CPI (0.7% expected, 0.1% previous)
  • 7:55 am GMT: German unemployment change (-10K expected, -14K previous)
  • 8:30 am GMT: U.K. current account (-16.3B GBP expected, -25.5B GBP previous)
  • 8:30 am GMT: U.K. final GDP (q/q) expected to remain at 0.7%
  • 8:30 am GMT: U.K. index of services (0.7% expected, 0.8% previous)
  • 8:30 am GMT: U.K. revised business investment (q/q) expected to remain at -1.0%
  • 9:00 am GMT: Euro Zone CPI flash estimate (y/y) (1.8% expected, 2.0% previous)
  • 9:00 am GMT: Euro Zone core CPI flash estimate (y/y) (0.8% expected, 0.9% previous)
  • 9:00 am GMT: Italian preliminary CPI (0.1% expected, 0.4% previous)