April 16, 2015. Lacker, Lockhart, Mester, Fischer, Rosengren chirping
- US March housing starts 926K vs 1040K exp
- US initial jobless claims 294Kvs. 282K revised
- Canadian non-residential construction down 1.2% in Q1
- April Philly Fed +7.5 vs +6.0 expected
- Fed's Fischer says Q1 was 'poor', doesn't know about Q2
- Constancio says ECB doesn't see deflation risk materializing
- IMF says more US dollar gains could lead to unbalanced growth
- The world according to Goldman Sachs
- Why central bank moves drive markets for more than a day
- Fed's Lockhart strikes a less-hawkish tone
- Fed's Mester: Comfortable with rate hike 'relatively soon' if economy rebounds
- Germany's Schaeuble: Debt levels in global economy a concern
- Crude oil makes a new high. USDCAD moves lower
- Dollar making new session lows
- The Fed's Lockhart spells out a ridiculously crowded view
- US major stocks close down fractionally on the day
- IMF panel discussion comments: Fed's Fischer and ECB Praet
- The strongest and weakest currencies for April 16 2015
The US data at 8:30 AM ET continued the trend toward the weak side in trading today. Initial claims moved up to 294K (est. 280K) and Housing starts rose to 926K from 908K (revised from 897K), but was weaker than expectations. Building permits, were also weaker at 1039K vs 1081K estimate.
The dollar fell on the initial news (traders are not interested in seeing anything weaker anymore). with the EURUSD extending to new day highs at 1.0766 but the GBPUSD and USDJPY failed to make new extremes for the day. The disappointment to extend, led to a move back into the greenback when Philadelphia Fed data came in at 7.5 vs 6.0 estimate. Although stronger, 7.5 is not gangbusters compared to the 24.5 reading in December or the 40.2 reading in November 2014. In March and April of last year when the weather was much worse, the index was higher at 10.7 and 16.0 respectively. The dollar buying stopped and the selling became more of the trend for most of the rest of the trading day.
There were no glitter bombs going off like yesterday when ECB Draghi gave his monthly press conference, but the market was bombarded with "your amount" of Fed-speak today. No fewer than 5 Fed officials spoke at some point. Stanley Fischer - the Vice Chair - was the one with the most name recognition, and he did not exactly endorse a June lift off. He did say he saw signs of higher wages starting now, but also said demand was weak and he did not see inflation rising toward 2% for a couple of years. A added that a rate rise would depend on how the economy developed.
The other officials were equally as ambivalent with perhaps the exception being Mester who said that she expects lift off relatively soon. Rosengren said 1Q showed US is not ready for an interest rate increase. Dennis Lockhart said he sees heightened uncertainty about the US economy's tract and that inflation continues to be soft. Lacker said Fed is widely expected to raise rates this year. Well I hope so.
The dollar - in the US afternoon session - was printing new day lows vs the EUR, GBP, AUD, CHF, CAD and NZD. In fact it was the weakest of the major currencies for the day.
The USDCAD continued its move lower, being helped by the highest oil close in 2015. It fell below the 100 day MA at the 1.2198 level and closed below that MA for the first time since July 2014. Stay below and the bears remain in control.
The AUDUSD - coming off a solid across the board employment report - made new month highs and started to raise doubts about a May rate cut. China is slowing. Iron Ore prices are down near lows gong back to 2009, but housing is strong and job numbers were good. Are they believable though? The AUDUSD has room to roam toward it's 100 day MA at the 0.7929 level going forward without damaging the bearishness from a technical perspective. The pair closed at 0.7801.
GBPUSD rallied close to 1.5000 - rising to 1.4969 (high for the day). Can cable squeeze over 1.5000 into the election or is that asking too much?
The USDCHF closed back below the 100 day MA at the 0.9595 level. Stay below and it is looking more bearish (at least until the SNB starts getting nervous).
In the new trading day, UK job data will be released. EU CPI for March will be released with estimates at +1.1% for the month but -0.1% YoY. Core YoY is expected to come in at 0.6% unchanged from last month. US and Canada CPI will be release tomorrow at 8:30 AM along with Canada retail sales. Finally, Michigan consumer confidence finishes the weeks economic events (94.0 est vs 93.).
