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5 Mar 2013
Forex Flash: Majors down on Dollar as spending cuts kick in - OCBC Bank
Emmanuel Ng of OCBC Bank notes that even as spending cuts for the US kicked in, the majors ended mixed to lower against the greenback on Fri while the JPY (sustained dovish market talk) and the GBP (disappointing Feb manufacturing PMI) under performing across the board.
He sees that on a broader scale, global PMIs released on Friday were mixed to softer than expected, dragging general confidence levels through the mud. Notably, the pair of manufacturing PMIs out of China for February moderated from the previous month. He adds that over the weekend, the February non-manufacturing PMI for China also dipped to 54.5 from 56.2 in January and in contrast, the USD found some support from the better than expected ISM and Uni. of Michigan consumer confidence readings. Elsewhere, Ng sees that EUR remained under the pressure of macro/political uncertainty with the manufacturing PMI largely steady and still mired in contraction territory while the Jan unemployment rate continued to climb to 11.9%. As a result, the EUR/USD also dipped briefly under the 1.3000 area.
Looking ahead, he sees that apart from the global data calendar (in particular, the services PMIs and especially the February US labor market report on Fri), he recommends that investors look towards central bank rhetoric for further cues with the Bank of Canada on Wednesday (mkts: unchanged at 1.00%), Fed Beige Book also on Wed, while the ECB (watch for any references to EUR) and the Bank of England (speculation mounting for further QE) convene on Thursday. Meanwhile, the BOJ meeting (the last for incumbent Shirikawa) also on Thursday will be closely scrutinized with dovish comments from BOJ governor nominee Kuroda early this morning also sufficiently yen-bearish, noting that he would do “whatever it takes to end deflation”.
He sees that on a broader scale, global PMIs released on Friday were mixed to softer than expected, dragging general confidence levels through the mud. Notably, the pair of manufacturing PMIs out of China for February moderated from the previous month. He adds that over the weekend, the February non-manufacturing PMI for China also dipped to 54.5 from 56.2 in January and in contrast, the USD found some support from the better than expected ISM and Uni. of Michigan consumer confidence readings. Elsewhere, Ng sees that EUR remained under the pressure of macro/political uncertainty with the manufacturing PMI largely steady and still mired in contraction territory while the Jan unemployment rate continued to climb to 11.9%. As a result, the EUR/USD also dipped briefly under the 1.3000 area.
Looking ahead, he sees that apart from the global data calendar (in particular, the services PMIs and especially the February US labor market report on Fri), he recommends that investors look towards central bank rhetoric for further cues with the Bank of Canada on Wednesday (mkts: unchanged at 1.00%), Fed Beige Book also on Wed, while the ECB (watch for any references to EUR) and the Bank of England (speculation mounting for further QE) convene on Thursday. Meanwhile, the BOJ meeting (the last for incumbent Shirikawa) also on Thursday will be closely scrutinized with dovish comments from BOJ governor nominee Kuroda early this morning also sufficiently yen-bearish, noting that he would do “whatever it takes to end deflation”.