The previous session’s risk-friendly theme carried over to the Asian session and pushed high-yielding currencies higher.
We also heard from the RBA and Kuroda today, though markets mostly shrugged off their comments.
- RBA keeps rates steady at 1.50% as expected
- Australia’s current account deficit widens from -9.1.0B to -14.0B AUD in Q4 2017
- Australia’s retail sales up by 0.1% in January vs. 0.4% gain expected, 0.5% previous
- U.K.’s BRC retail sales monitor (y/y) maintains 0.6% growth in February
- Kuroda: any future exit would be “very gradual”
Back-to-back disappointment from Australia
Even before the RBA published its decision we already saw not one, but TWO top-tier reports from the Land Down Under.
Australia’s current account deficit widened to a seasonally adjusted 14.02B AUD in 2017’s December quarter when analysts only expected a 12.6B figure and Q3’s deficit only came in at 9.10B AUD in Q3.
Meanwhile, a monthly retail sales release saw purchases rising by only 0.1% in January, lower than the expected 0.4% growth but better than December’s 0.5% decrease.
RBA’s policy statement
As expected, the Reserve Bank of Australia (RBA) kept its interest rates steady at 1.50% in March.
The central bank maintained its optimism on the economy, saying that they’re expecting it to grow “faster in 2018 than it did in 2017.” It pointed to non-mining business investment, public infrastructure, and expected growth in exports as sources of upside risks.
Philip Lowe and his team are still concerned over household consumption, however. While they believe that “the rate of wage growth appears to have troughed,” they also maintained their observation that household consumption is a “continuing source of uncertainty because “household incomes are growing slowly and debt levels are high.”
Overall, nothing really new from the RBA, which is probably why the Aussie showed more reaction to the top-tier reports printed before the RBA’s announcement today.
Relief from trade war concerns
As mentioned in my U.S. session recap, cautionary comments from Republican Party members have sparked hope that the Donald won’t implement his steel and aluminum tariffs in its initial form.
The risk-friendly environment carried over to the Asian markets and pushed equities and commodities across the board.
- Nikkei is up by 2.17% to 21,499.5;
- Australia’s A SX 200 is up by 0.02% to 5,961.2;
- Hang Seng is up by 1.39% to 30,301.0, and
- Shanghai index is up by 0.21% to 3,263.707.
Gold and oil prices were also in the risk appetite train:
- Gold is up by 0.14% to $1,322.18;
- Brent crude oil is up by 0.11% to $65.61, and
- U.S. WTI is up by 0.11% to $62.66.
Major Market Mover(s):
A combo of risk appetite and a bit of jawboning from BOJ’s Kuroda weighed on the low-yielding yen today.
USD/JPY is up by 14 pips (+0.13%) to 106.34;
EUR/JPY is up by 31 pips (+0.24%) to 131.32, and
GBP/JPY is up by 15 pips (+0.10%) to 147.21.
Risk appetite gave the Aussie a push at the start of the day, but back-to-back misses in Australia’s data releases inspired an intraday reversal for the comdoll.
AUD/USD hit a high of .7793 before slipping back to .7780;
AUD/JPY rose to 82.88 before retracing to 82.73;
AUD/NZD shot up to 1.0767 before falling to 1.0755, while
GBP/AUD fell to 1.7769 before rising back up to 1.7797.
Risk appetite and a bit of profit-taking from yesterday’s heavy losses made Kiwi one of the biggest winners of the session.
NZD/USD is up by 10 pips (+0.14%) to .7236;
NZD/JPY is up by 22 pips (+0.28%) to 76.95, and
GBP/NZD is down by 32 pips (-0.17%) to 1.9129.
Watch Out For:
- 8:15 am GMT: Switzerland’s CPI (-0.3% expected, -0.1% previous)
- 9:10 am GMT: Euro Zone’s retail PMI