Article Highlights

  • U.S. trade deficit narrowed from $48.2B to $43.6B vs. $46.0B forecast
  • Canadian trade balance printed 1B CAD deficit vs. projected 0.7B CAD surplus
  • U.S. factory orders up by 1.0% as expected
  • Fed official Lacker resigned on disclosing confidential FOMC information
  • New Zealand GDT auction yielded 1.6% gain in dairy prices
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The U.S. dollar had a mixed performance as it slid lower to most of its counterparts but advanced against the yen then consolidated against the pound and Kiwi.

Major Events:

Upbeat U.S. economic data – Reports from Uncle Sam signaled that the economy is doing A-okay these days. The trade balance showed a narrower deficit from $48.2 billion in January to $43.6 billion in February versus the consensus at $46 billion.

Components of the report indicated that exports ticked up by 0.2% while imports were down by 1.8% after previously printing a 2.3% gain. Exports are actually up to their highest level in two years at $192.9 billion, led by gains in consumer goods and industrial supplies and materials. On the flip side, imports of consumer goods and automotive parts and vehicles declined while crude oil purchases ticked higher.

Meanwhile, factory orders posted a 1.0% jump as expected in February while the previous reading was upgraded from 1.2% to 1.5%. However, this was merely due to another monthly gain in orders for commercial aircraft while other categories tracking business investment were in the red, underscoring the Fed’s concerns about that particular aspect of the economy.

Weak Canadian trade balance – Headline figures from Canada didn’t turn out so good as the February trade balance showed a shortfall of 1 billion CAD – its first deficit in nearly half a year – versus the projected 0.7 billion CAD surplus. To top it off, the previous reading was downgraded from a surplus of 0.8 billion CAD to just 0.4 billion CAD.

The February trade balance report indicated that exports were down 2.4% as eight out of the 11 sectors reported declines. This included consumer goods, farm, fishing and intermediate food products, and aircraft and other transportation equipment.

Imports advanced by 0.6%, buoyed by an increase in special transactions trade and motor vehicles and parts. As it turns out, special transactions trade reflects low-valued transactions, repairs to equipment, and an estimate for late documentation of transactions, which suggests that it could be a one-off factor. Still, it’s worth noting that imports of motor vehicles and parts surged to $9.1 billion, which is its highest level since August 2016.

Major Market Movers:

JPY –  The Japanese currency seems to be in correction mode as it returned some of its recent gains while U.S. bond yields recovered. The U.S. 10-year yield is back to 2.360% and the 2-year yield rose 2.6 basis points to 1.252%.

USD/JPY bounced off a low of 110.26 to a high of 110.85, EUR/JPY recovered from the 117.50 area to 118.25, GBP/JPY rebounded from 137.10 to a high of 137.85, and AUD/JPY climbed from 83.23 to 83.84.

Watch Out For:

  • 12:30 am GMT: Australia AIG services index
  • 2:00 am GMT: New Zealand ANZ commodity prices

See also:

London Session Recap
Asian Session Recap

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