Article Highlights

  • German GFK consumer sentiment: 9.8 vs. steady at 10.0 expected
  • French INSEE manufacturing confidence: 104 vs. steady at 107 expected
  • U.K. retail sales m/m: 1.4% vs. 0.4% expected, -0.5% previous
  • U.K. retail sales y/y: 3.7% vs. 2.6% expected, 1.0% previous
  • CBI’s U.K. distributive sales: 9 vs. 4 expected, 9 previous
  • Fed Chair Yellen will speak later
  • New Zealand’s trade report will be released
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Another choppy European session today, very likely because market players are waiting for the vote on the U.S. healthcare bill, which is seen as a test for Trump’s ability to push his agenda. There was some wonky price action, though, since the yen was mostly higher despite higher bond yields and the overall risk-on vibes.

Major Events/Reports:

U.K. retail sales surge – The ONS released the U.K.’s retail sales report earlier. And according to the report, retail sales volume surged by 1.4% month-on-month in February. This is a substantially better reading than the expected 0.4% recovery after January’s 0.5% decline. Moreover, the surge in February is the first positive reading after three consecutive months of monthly declines.

Year-on-year, retail sales volume increased by 3.7%, easily outpacing the consensus reading of +2.6%, as well as the previous month’s +1.0%. In addition, the faster increase puts an end to the four-month trend of ever weaker year-on-year readings.

Month-on-month, all store types printed increases. However, the 3.7% jump in sales volume from household goods stores was the biggest driver. As for the annual reading, most store types also printed increases, but fuel stores were a drag. If the contraction from gasoline stations are stripped, then retail sales volume would print an even faster 4.1% increase.

Risk appetite returns – There were signs of moderate risk-taking in Europe today, since European equities were in the green.

  • The pan-European FTSEurofirst 300 was up by 0.28 to 1,479.57
  • Germany’s DAX was up by 0.37% to 11,948.50
  • The blue-chip Euro Stoxx 50 was up by 0.24% to 3,431.00

U.S. equity futures even got a boost.

  • S&P 500 futures were up by 0.19% to 2,347.00
  • Nasdaq futures were up by 0.12% to 5,372.12

Market analysts say that the moderate risk-on mood was due to optimism over the U.S. healthcare vote later, which is seen as a test on Trump’s ability to push through with his agenda, including his fiscal stimulus plans.

Major Market Mover(s):

JPY – Despite the risk-on vibes, the yen actually did rather well during the session. There were no apparent catalysts for this wonky price action. Weirder still, bond yields were actually in the green, and yet the yen showed strength.

However, some market analysts pointed to political jitters in Japan, thanks to Prime Minister Shinzo Abe’s supposed involvement in a certain scandal.

USD/JPY was down by 19 pips (-0.17%) to 111.06, CHF/JPY was down by 36 pips (-0.32%) to 111.84, AUD/JPY was down by 38 pips (-0.45%) to 84.85

AUD – The yen wasn’t the only one with weird moves, since the Aussie was mostly weaker despite the risk-on vibes. Looking at commodities, they were mixed for the session, but iron ore, Australia’s main export commodity, took another tumble for the day. And that’s probably why the Aussie took hits across the board.

AUD/USD was down by 21 pips (-0.28%) to 0.7639, AUD/CAD was down by 24 pips (-0.24%) to 1.0181, AUD/CHF was down by 11 pips (-0.15%) to 0.7585

Watch Out For:

  • 12:30 pm GMT: U.S. initial jobless claims (240K expected, 241K previous)
  • 12:45 pm GMT: Fed Chair Janet Yellen will speak
  • 2:00 pm GMT: U.S. new home sales (566K expected, 555K previous)
  • 3:00 pm GMT: Euro Zone consumer sentiment (-5.9 expected, -6.2 previous)
  • 4:30 pm GMT: Minneapolis FEd President Neel Kashkar will speak
  • 5:00 pm GMT: SNB Governing Board Member Andrea Maechler has a speech
  • 9:45 pm GMT: New Zealand’s trade balance: ($180B expected, -$285B previous)

See also:

Asian Session Recap 
U.S. Session Recap

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