Key Forex Afternoon Notes:
- Japan M2 money supply y/y 3.4% vs. 3.6%
- Australia NAB business confidence 3 vs. 2 previously
- Australia HPI q/q 1.9% vs. 2%
- China CPI y/y 0.8% vs. 1.1%; PPI y/y -4.3% vs. -3.7%
- Switzerland unemployment rate 3.1% vs. 3.2%
- French industrial production m/m 1.5% vs. 0.3%
- Switzerland CPI mom -0.4% as expected
- Italian industrial production m/m 0.4% vs. 0.1%
- UK Manufacturing production m/m 0.1% vs. 0.3%; industrial production m/m -0.2% vs.
Later:
- FOMC member Lacker speech
- US NFIB small business index
- JOLTS jobs openings report
- IBD/TIPP economic optimism
- Wholesale inventories m/m
The markets were geared up to the China inflation data release, which fell worse than expected, rising at its slowest pace at 0.8%, while Producer price index also declined -3.7%. The Australian and Kiwi dollars were relatively unchanged on the dovish news in expectations that PBOC will come forth with monetary easing measures as early as March this year, with prospects of a rate cut.
The Japanese Yen opened the day on a weaker note but managed to stabilize near session lows of 118.4 rising higher for the day ahead of the US trading session open, trading near highs of 119 levels. The Yen continues to remain mixed across the board, although there are signs that the currency could weaken in the short term, giving a boost to the Yen cross currencies.
Economic data from Australia was mixed with business confidence improving to 3, from 2 previously while the quarterly housing price index was soft. Nonetheless, the Aussie dollar shrugged off the news ahead of the key jobs report due later in the week.
The European trading session saw industrial production data from France and Italy, both of which surprised to the upside. The Euro remained muted to the news as the ongoing Greek crisis continues to overshadow any medium impact news releases. The Euro briefly spiked to 1.3368 on news that there would be a deal soon between the EU and Greek authorities as the latter was showing signs of a compromise in order to secure a short term funding while continuing negotiations for the longer term. But there has been no official announcement on the deal yet. The Euro is likely to remain choppy at least until there is a bit more clarity on the issue.
In the UK, industrial and manufacturing production data both fell below estimates, but the Sterling remains resilient though mixed across the board, weaker against the Greenback but stronger against other currencies.
In the run up to the US trading session, the Dollar index managed to remain in the green, although little changed since today’s open. The Dollar index was seen trading at 94.87 handle at the time of writing. There are no major news releases from the US for today with the exception of the JOLTS job openings, IBD economic optimism, small business index and whole sale inventories data followed by a speech by Fed member Jeffrey Lacker who is a voting member of the FOMC.
