The US$ is generally firmer today with the Euro and Sterling notably under pressure as economic respective data outcomes missed expectation. In the UK, the CPI miss was by 0.1%, coming in at 0.4%mm (exp 0.5%) and at 2.7%yy (exp 2.8%). The Euro had its own issues when the miss in the German and the EU ZEW figures came in considerably below expectations. The German ZEW economic sentiment dropped to 5.1 in March, down from 17.8, below expectation of 13.0 while the current situation gauge dropped to 90.7, down from 92.3, but above expectation of 90.0. The EU ZEW economic sentiment also dropped sharply to 13.4, down from 29.3, missing expectation of 28.1. Elsewhere, the US$ remained firm against the commodity bloc and is also higher against the Yen today. Stock markets have stabilised ahead of the FOMC, due at the end of today’s session while the metals are rangebound but heavy at the end of the session. WTI gained 2% as the prospect of supply disruptions amid Middle East tensions offset expectations for a rise in U.S. crude supplies for the fourth-straight week.
Wednesday will begin with a quiet Asian (NZ NZ Visitor Arrivals, Credit Card Spending; Australian WBC Leading Index) and EU 19 March (UK Unemployment), but will then become busy when the US get going, with all the focus on the 1st Jerome Powell led FOMC Meeting. A rate hike is fully priced in but the real interest is going to lie in the dot-plot and Powell’s outlook. His optimism over the US economy has encouraged speculation that the Fed could hike rates four times this year, up from the current dot-plot outline for 3 hikes. Traders will therefore be scrutinising his words to see if he will maintain his hawkish stance. If so expect the US$ to resume its recent rally, or vice versa if he stands pat and takes a more cautious stance.
|INDICES / COMMODITIES|
|ASX SPI: 5937|
By March 21, 2018