JPY Small business confidence improves
EUR M3 growth accelerates
GBP Mortgage application down cooling housing?
CHF UBS consumption indicator hits 7-month high
USD Fully loaded calendar
The markets have shifted in a big way over the course of Asian and early European trading today as the unwinding of carry trades have paced the Japanese Yens rally for the second day in a row while the US Dollar has plummeted on mounting global risks as a UN conference to discuss possible sanctions against Iran started yesterday.
Although the 100 point drop in USDJPY to the 119.50 level is nothing to scoff at, NZDJPY has precipitously plunged nearly 2 percent from yesterdays New York close to a low of 84.17 as traders show a material deleveraging theme. Adding evidence to this idea is equity market action, which have taken a severe hit in Asia with Chinas Shanghai Composite index down 9 percent the sharpest single-session fall in 10 years which has clearly shaken European traders a bit, sending the FTSE 100, Xetra Dax, and CAC 40 all down 1 percent by the London afternoon.
In economic news, the February reading of retail PMI for the Euro-zone surprisingly rose to a reading of 49.8 from 47.9 the month prior. The figure remains weighed down by Germanys contribution, which was well below 50 at 45.0 indicating contraction in the sector while the readings out of France and Italy posted at 54.7 and 50.4, respectively. German PMI did manage to rise from the month prior, signaling that the VAT hike to 19 percent may be having less of an impact on spending. Meanwhile, M3 money supply for the Euro-zone unexpectedly edged up to 9.8 percent in January just under a sixteen year high from 9.7 percent. Estimates had been for a dip in the annual rate to 9.5 percent and the acceleration will underpin arguments for a rate hike by the European Central Bank in March, as money supply growth has been a major inflation concern cited by the central bank. However, 3.75 percent may cap ECB rates for much of 2007, as price growth has remained fairly tepid and the central bank will likely favor a wait-and-see approach in order to gauge the effect of higher rates on consumers, businesses, and the economy as a whole.
The US calendar is fully packed today with durable goods, existing home sales and consumer confidence all on tap. The broad consensus is that the data will not bode particularly well for the greenback, as a drop in Boeing orders will likely drag durable goods down while oil back above $60/bbl should weigh on consumer confidence. Home sales remain the wild card, however, as the stability of the housing market may be questionable. Nevertheless, the US session should be an exciting one as traders attempt to price the Federal Reserves next move.
