Australia was again in the spotlight on the data front during the Asian session, with April retail sales and trade balance on the agenda. Retail sales were a lot firmer than expected, rising 1.1% m/m in a healthy rebound from April’s revised -0.3%. Seasonal factors including the timing of Easter and ANZAC day were partly responsible for the stronger number but, tied in with the strong domestic demand component in yesterday’s GDP numbers might suggest the Ozzie consumer may be regaining some of the confidence from before. After being whacked dramatically late yesterday, the AUD was only able to regain half of the lost ground and failed to take out the perceived resistance at 1.0650. Australia’s trade balance was not quite so impressive with the surplus falling to A$1.6 bln from A$1.7 bln last and falling short of market expectations of a A$2.0 bln surplus.
There were a couple of speakers on the wires during the Asian session but nothing ground-breaking. Fed’s Yellen repeated that the current accommodative stance is appropriate given the high level of unemployment and subdued inflation. Meanwhile BOJ’s Nakamura said he expects the Japanese economy to experience more downward pressure near-term in the wake of March’s earthquake but there was evidence that consumption was improving with companies gradually restoring output and supply lines.
The European data slate is restricted to U.K. construction PMI today while the US session features the weekly jobless claims (market looking for confirmation whether yesterday’s ADP data was in conformity) along with factory orders and the weekly Bloomberg consumer comfort index.
Looking back to yesterday, risk off was the theme of the day as the recent run of poor US data continued. Add to that a late downgrade on Greek debt, and a negative outlook, by Moody’s and the EUR gave back all the gains of the past two days in a short period. CHF was the outperformer as investors ran for safe havens with surprisingly robust Swiss data helping the cause (Swiss PMI one of the few global PMIs to register improvement while retail sales were also strong). GBP suffered with the risk off theme with UK PMI falling to its lowest level since November 2009 and mortgage approvals indicating a still sluggish housing market. AUD failed to overcome the 1.0750 resistance post-GDP and tumbled as risk was taken off the table.
On the U.S. front, the manufacturing ISM conformed to the weak theme seen elsewhere round the globe, falling to 53.5 from 60.4. The ADP employment report was a huge undershoot, registering a measly 38k jobs added compared with the expected 175k and 177k last. The poor data, and weak sentiment out of Europe, meant Wall St suffered its biggest one day fall in a year with the DJIA down 2.22%, S&P -2.28% and the Nasdaq -2.33%. U.S. bond yields were in retreat with the benchmark 10-year yield falling below 3.0% for the first time since July 2010, closing at 2.94%. USDJPY retreated a tad as U.S. yields dipped but only as low as 80.70, the earlier lows.
Note it is a public holiday in a number of European centres for Ascension Day and hence some liquidity/activity issues may crop up.
Economic Data Highlights
- US May Challenger Jobs Cuts out at -4.3% y/y vs. -4.8% prior
- US May ADP Employment Change out at 38k vs. 175k expected and revised 177k prior
- US Apr. Construction Spending out at +0.4% m/m vs. 0.3% expected and revised 0.1% prior
- US ISM Manufacturing out at 53.5 vs. 57.1 expected and 60.4 prior
- US ISM Prices Paid out at 76.5 vs. 81.5 expected and 85.5 prior
- JP May Monetary Base out at 16.2% y/y vs. 23.9% prior
- JP Q1 Capital Spending out at +3.3% y/y vs. 3.0% expected and 3.8% prior
- AU Apr. Retail Sales out at +1.1% m/m vs. 0.4% expected and -0.3% prior
- AU Apr. Trade Balance out at +A$1.597 bln vs. +A$2.0 bln expected and revised +A$1.691 bln prior
Upcoming Economic Calendar Highlights
(All Times GMT)
- UK PMI Construction (0830)
- EU ECB’s Trichet to speak (0915)
- US Non Farm Productivity (1230)
- US Unit Labour Costs (1230)
- US Initial Jobless Claims (1230)
- US Bbg Consumer Comfort Index (1345)
- US Factory Orders (1400)