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Andro Matugas-Barnes
Mar 05 2019

TAT FX Brief: Mar19

News & Insights
TAT FX Brief: Mar19
<p>The Australian dollar rose modestly against most major crosses on Monday as renewed optimism towards US-Sino trade negations was offset by increased speculation that Australian economic growth remained sluggish in the December quarter, increasing the likelihood of another interest rate&nbsp;cut from the RBA.</p> <p>After beginning the week at .7080, the AUD/USD jumped in early Asian trade on a report from the Wall Street Journal that the United States and China were on the cusp of reaching a trade agreement, potentially as soon as the end of this month.</p> <p>The news saw the AUD/USD jump to as high as .7118, but the gains couldn&rsquo;t be sustained, hinting that a trade deal has now all but been priced in by financial markets.</p> <blockquote> <p>&ldquo;[The article] produced a decent risk rally across all equity markets during the Asian session yesterday, but the New York market moves are now being read as proof that a trade deal must surely now be fairly fully priced,&rdquo; said Ray Attrill, Head of FX Strategy at the National Australia Bank.</p> </blockquote> <p>Along with a trade deal being largely discounted by traders, the Aussie was also undermined by the domestic economic data flow on Monday.</p> <p>Q4 business indicators were universally soft, including a surprise decline in business inventories that will make no contribution to Q4 GDP growth, increasing the risk of a very weak result when Australia&rsquo;s national accounts are released on Wednesday.</p> <p>Elsewhere, ANZ job ads fell for a fourth consecutive month, leaving the total decline in postings over the past year at 4.3%, the steepest fall since 2014.</p> <p>Building approvals data for January did exceed expectations, although the rebound was only modest and followed two months of substantial falls.</p> <p>The weak data set, mirroring the trend in a increasing number of economic indicators, was enough to see Nomura join a growing list of forecasters who are calling for further rate cuts from the RBA this year.</p> <blockquote> <p>&ldquo;More signs of weaker-than-expected growth amid growing downside risks have tipped us over the edge,&rdquo; said Andrew Ticehurst, Economist at Nomura.</p> <p>&ldquo;We now forecast 50 basis points of rate cuts from the Reserve Bank of Australia (RBA) this year. As we assess the situation, we see little benefit in waiting too long and pencil in two 25bp moves by around September.&rdquo;</p> </blockquote> <p>While the Aussie failed to advance much against the greenback, it did manage&nbsp;to post larger gains against some major crosses, particularly the euro and British pound.</p> <p>As for the reason behind the underperformance in the European currencies, there was no clear catalyst to explain the move.</p> <p>&ldquo;There&rsquo;s not a lot of rhyme nor reason to what is a fairly disjointed set of moves across the G10 currency spectrum,&rdquo; said Attrill at the NAB.</p> <p>UK construction PMI data was weak in February, and persistent concerns about a potential trade dispute between the EU and US remain. However, whether that was the reason for the falls on Monday is questionable.</p> <p>Turning to the session ahead, the data calendar will be dominated by services PMI reports from around the world, along with the last of Australia&rsquo;s Q4 GDP inputs.</p> <p>On the latter, government demand and Balance of Payments figures for the December quarter will both arrive at 11.30am AEDT. Within the latter, net exports are expected to slice 0.1 percentage points from Q4 GDP.</p> <p>As for government demand, Westpac economists are looking for a quarterly increase of 0.4%, an outcome that will add modestly to GDP.</p> <p>Before the GDP partials arrive, the latest Australian Performance of Services Index from the Ai Group, along with the weekly ANZ-Roy Morgan Australian consumer confidence index, will hit at 8.30am and 9.30am AEDT.</p> <p>Topping off a busy domestic events calendar, the RBA will also announce its March interest rate decision at 2.30pm AEDT. While no change is expected, markets will be on the look out for any signals on the potential for a rate cut given a continued deterioration in most Australian economic indicators.</p> <p>This 10-second guide has more on what to look out for in the post-meeting statement.</p> <p>Outside of Australia, services PMI reports for February will dominate with figures from China, Japan, UK, Eurozone and US - the headline acts.</p> <p>Eurozone retail sales, along with NFIB small business optimism, new home sales, monthly federal budget figures and API crude oil inventories from the United States, will also be released.</p> <p>On the central bank front, Carney from the BoE and Kashkari and Rosengren from the Fed are scheduled to be in action.</p> <blockquote> <p>Of note, China&rsquo;s National People&rsquo;s Congress will also begin and run through to mid-March.</p> </blockquote> <ul> <li><strong>AUD/USD</strong></li> </ul> <p>Day&#39;s Range: 0.7076 - 0.7093</p> <ul> <li><strong>AUD/EUR</strong></li> </ul> <p>Day&#39;s Range: 0.6244 - 0.6262</p> <ul> <li><strong>AUD/GBP</strong></li> </ul> <p>Day&#39;s Range: 0.5342 - 0.5384</p> <ul> <li><strong>AUD/CNY</strong></li> </ul> <p>Day&#39;s Range: 4.7458 - 4.7572</p> <ul> <li><strong>AUD/INR</strong></li> </ul> <p>Day&#39;s Range: 50.173 - 50.293</p> <p><strong>Announcements to Watch:</strong></p> <p>Friday, March 1, 2019</p> <p>All Day &nbsp;&nbsp;Holiday South Korea - Independence Movement Day<br /> 00:30 &nbsp;&nbsp;USD GDP (QoQ) (Q4)&nbsp; &nbsp;<br /> 12:15 &nbsp;&nbsp;USD Fed Chair Powell Speaks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 12:45 &nbsp;&nbsp;CNY Caixin Manufacturing PMI (Feb)&nbsp;<br /> 19:55 &nbsp;&nbsp;EUR German Manufacturing PMI (Feb)&nbsp;<br /> 19:55 &nbsp;&nbsp;EUR German Unemployment Change (Feb)&nbsp;<br /> 20:30 &nbsp;&nbsp;GBP Manufacturing PMI (Feb)&nbsp;<br /> 21:00 &nbsp;&nbsp;EUR CPI (YoY) (Feb)&nbsp; &nbsp;</p> <p>Saturday, March 2, 2019</p> <p>00:30 &nbsp;&nbsp;CAD GDP (MoM) (Dec)<br /> 02:00 &nbsp;&nbsp;USD ISM Manufacturing PMI (Feb)&nbsp;</p> <p>Monday, March 4, 2019</p> <p>All Day &nbsp;&nbsp;Holiday Brazil - Carnival<br /> All Day &nbsp;&nbsp;Holiday India - Mahasivarathri Day<br /> 20:30 &nbsp;&nbsp;GBP Construction PMI (Feb)&nbsp; &nbsp;</p> <p>Tuesday, March 5, 2019</p> <p>All Day &nbsp;&nbsp;Holiday Brazil - Carnival<br /> 14:30 &nbsp;&nbsp;AUD RBA Interest Rate Decision (Mar)&nbsp; &nbsp;<br /> 14:30 &nbsp;&nbsp;AUD RBA Rate Statement&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 20:30 &nbsp;&nbsp;GBP Services PMI (Feb)&nbsp; &nbsp;</p> <p>Wednesday, March 6, 2019</p> <p>02:00 &nbsp;&nbsp;USD ISM Non-Manufacturing PMI (Feb)&nbsp;<br /> 02:00 &nbsp;&nbsp;USD New Home Sales (Dec)&nbsp;&nbsp;<br /> 02:00 &nbsp;&nbsp;CAD Ivey PMI (Feb)&nbsp; &nbsp;&nbsp;<br /> 02:35 &nbsp;&nbsp;GBP BoE Gov Carney Speaks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 11:30 &nbsp;&nbsp;AUD GDP (QoQ) (Q4)&nbsp; &nbsp;</p> <p>Thursday, March 7, 2019</p> <p>00:15 &nbsp;&nbsp;USD ADP Nonfarm Employment Change (Feb)<br /> 02:00 &nbsp;&nbsp;CAD BoC Interest Rate Decision&nbsp; &nbsp;<br /> 02:00 &nbsp;&nbsp;CAD Ivey PMI (Feb)&nbsp; &nbsp; &nbsp;<br /> 02:30 &nbsp;&nbsp;USD&nbsp;Crude Oil Inventories</p> <p>11:30 &nbsp;&nbsp;AUD Retail Sales (MoM) (Jan)&nbsp;&nbsp;<br /> 23:45 &nbsp;&nbsp;EUR Deposit Facility Rate&nbsp; &nbsp;<br /> 23:45 &nbsp;&nbsp;EUR ECB Marginal Lending Facility&nbsp;<br /> 23:45 &nbsp;&nbsp;EUR ECB Interest Rate Decision (Mar)&nbsp;</p> <p>Friday, March 8, 2019</p> <p>00:30 &nbsp;&nbsp;EUR ECB Press Conference&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 10:50 &nbsp;&nbsp;JPY GDP (QoQ) (Q4)&nbsp; &nbsp;</p> <p>Saturday, March 9, 2019</p> <p>00:30 &nbsp;&nbsp;USD Building Permits (Jan)&nbsp; &nbsp;<br /> 00:30 &nbsp;&nbsp;USD Nonfarm Payrolls (Feb)&nbsp;<br /> 00:30 &nbsp;&nbsp;USD Unemployment Rate (Feb)&nbsp;&nbsp;<br /> 00:30 &nbsp;&nbsp;CAD Employment Change (Feb)&nbsp;<br /> 14:00 &nbsp;&nbsp;USD Fed Chair Powell Speaks&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>Monday, March 11, 2019</p> <p>All Day &nbsp;&nbsp;Holiday Greece - Ash Monday<br /> 23:30 &nbsp;&nbsp;USD Core Retail Sales (MoM) (Jan)&nbsp; &nbsp;<br /> 23:30 &nbsp;&nbsp;USD Retail Sales (MoM) (Jan)&nbsp; &nbsp;</p> <p>Tuesday, March 12, 2019</p> <p>20:30 &nbsp;&nbsp;GBP Manufacturing Production (MoM) (Jan) &nbsp;&nbsp;<br /> Tentative &nbsp;&nbsp;GBP UK Parliament vote on Brexit deal &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 23:30 &nbsp;&nbsp;USD Core CPI (MoM) (Feb)&nbsp; &nbsp;</p> <p>Wednesday, March 13, 2019</p> <p>23:30 &nbsp;&nbsp;GBP Spring Forecast Statement&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 23:30 &nbsp;&nbsp;USD Core Durable Goods Orders (MoM) (Jan)<br /> 23:30 &nbsp;&nbsp;USD PPI (MoM) (Feb)&nbsp; &nbsp;</p> <p>Thursday, March 14, 2019</p> <p>13:00 &nbsp;&nbsp;CNY Industrial Production (YoY) (Jan)&nbsp; &nbsp;</p> <p>Friday, March 15, 2019</p> <p>21:00 &nbsp;&nbsp;EUR CPI (YoY) (Feb)&nbsp; &nbsp;</p> <p>Saturday, March 16, 2019</p> <p>01:00 &nbsp;&nbsp;USD JOLTs Job Openings (Jan)&nbsp; &nbsp;</p> <p>Tuesday, March 19, 2019</p> <p>20:30 &nbsp;&nbsp;GBP Average Earnings Index +Bonus (Jan)&nbsp; &nbsp;</p> <p>20:30 &nbsp;&nbsp;GBP Claimant Count Change (Feb)&nbsp; &nbsp; &nbsp;<br /> 21:00 &nbsp;&nbsp;EUR German ZEW Economic Sentiment (Mar)</p> <p>Wednesday, March 20, 2019</p> <p>20:30 &nbsp;&nbsp;GBP CPI (YoY) (Feb)&nbsp; &nbsp;</p> <p>Thursday, March 21, 2019</p> <p>All Day &nbsp;&nbsp;Holiday Japan - Vernal Equinox<br /> All Day &nbsp;&nbsp;Holiday India - Holi<br /> All Day &nbsp;&nbsp;Holiday South Africa - Human Rights Day<br /> 05:00 &nbsp;&nbsp;USD Fed Interest Rate Decision &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 08:45 &nbsp;&nbsp;NZD GDP (QoQ) (Q4) &nbsp;&nbsp;0.6% 0.3%<br /> 12:30 &nbsp;&nbsp;AUD Employment Change (Feb)&nbsp; &nbsp;<br /> 20:30 &nbsp;&nbsp;GBP Retail Sales (MoM) (Feb)&nbsp; &nbsp;<br /> 23:00 &nbsp;&nbsp;GBP BoE Interest Rate Decision (Mar)&nbsp; &nbsp;<br /> 23:30 &nbsp;&nbsp;USD Philadelphia Fed Manufacturing Index (Mar)</p> <p>Friday, March 22, 2019</p> <p>19:30 &nbsp;&nbsp;EUR German Manufacturing PMI (Mar)&nbsp; &nbsp; &nbsp;<br /> 23:30 &nbsp;&nbsp;CAD Core CPI (MoM) (Feb)&nbsp; &nbsp; &nbsp;<br /> 23:30 &nbsp;&nbsp;CAD Core Retail Sales (MoM) (Jan)&nbsp; &nbsp; &nbsp;</p> <p>Saturday, March 23, 2019</p> <p>01:00 &nbsp;&nbsp;USD Existing Home Sales (Feb)&nbsp; &nbsp; &nbsp;</p> <p>Monday, March 25, 2019</p> <p>All Day &nbsp;&nbsp;Holiday Greece - Greek Independence Day</p> <p>Tuesday, March 26, 2019</p> <p>22:00 &nbsp;&nbsp;BRL BCB Copom Meeting Minutes&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</p> <p>Sunday, March 31, 2019</p> <p>05:00 &nbsp;&nbsp;USD FOMC Economic Projections&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<br /> 05:00 &nbsp;&nbsp;USD FOMC Statement</p>

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