Archived IMT (2011.04.11)

US Roundup, Asia Preview:

Alcoa earnings disappointed, the carry trade unwound after the IMF warned of slowing growth and UK RICS remained weak, The Asia-Pacific calendar is filled with second-tier releases but the Bank of Korea could cause a stir.

ALOCA met earnings expectations but revenue was soft and shares fell 2% after hours. The company stuck by its forecast for 12% aluminum-demand growth in 2011 and that has minimized pressure on AUD and CAD. Readers of our earlier IMT (by GG) were reminded how Aloca also met earnings & disappointed on top line (revenues).

USD strengthened as the fear trade due the budget impasses evaporated, as we warned about on Friday. The strength came despite dovish comments from Yellen and Dudley. "We shouldn't be enthusiastic about tightening monetary policy too soon," Dudley said. I don't see any signs that expectations are becoming unanchored."

The IMF GRABBED THE HEADLINES by CUTTING US & UK GROWTH FCSTS. US 2011 GDP fcst was cut to 2.8% from 3.0% in January but this just follows similar moves from Wall Street economists. The IMF said rising commodity prices appear unlikely to derail the recovery the lack of conviction in the wording is a tad worrisome. The overall forecast for worldwide growth was bumped to 4.5% from 4.2% in October on developing market strength. UKs 2011 GDP fcst was cut to 1.7% from 2.0%, while keeping next years fcst intact at 2.3% .

ASIA PACIFIC PREVIEW:

APRIL UK RICS survey on house prices remained unchanged at -23%, showing similar pace of declines, while the BRC Retail Sales monitor fell 3.5% y/y from -0.4%. GBP EXTENDS LOSSES to $1.63350, while EURGBP looking to break 0.8850 barrier for the next key medium term target at 0.9930.

BANK OF JAPAN releases the minutes of the March 14 meeting at 23:50 GMT. The meeting was held three days after the earthquake but in light of last weeks meeting a new 1 trillion yen loan facility, the minutes will be more relevant to economic historians than traders. Japanese M2 money supply is expected at +2.5% and will be released at the same time.

SOUTH KOREA's CENTRAL BANK DECISION is one release under watch (02:00 GMT). The KRW slipped on fx intervention fears Monday even though the IMF raised the nations 2011 inflation forecast to 4.5% from 3.4%. In March the BOK hiked rates to 3.00% and they are widely expected to remain on the sidelines but with inflation at a 29-year high, a surprise hike or very hawkish rhetoric cant be ruled out and would boost KRW. Such a move could also weigh on AUD.

Other releases of note include Chinese FX reserves and M2 (Exp: +15.4%) at 00:00 GMT, National Australian Banks business confidence (Exp: +14) at 01:30 GMT and Japanese machine tool orders at 06:00 GMT.

By AB - AshrafLaidi.com staff