Archived IMT (2011.04.15)

US Roundup & Asia Monday Preview The yen gained further upside as weak corporate earnings outweighed generally positive U.S. economic data, while euro & sterling fell on sovereign worries. G20 will continue to meet in Washington DC into the weekend and the NZD hit a post-crisis high ahead of Mondays CPI data. It was an unlikely showing by both AUD & JPY to outperform simultaneously.

JPY & AUD made the unlikely occurrence of GAINING SIMULTANEOUSLY on Friday while the euro and pound lagged. No overriding theme developed as Europe focused on a potential Greek restructuring as German Deputy Fin Min Hoyer opened the door once again for a restructuring. Dow Jones also cited senior EU officials saying the majority of euro-zone countries believe a debt restructuring is inevitable and may happen next year. Soft earnings at Bank of America and Google hurt sentiment and boosted JPY. The Australian dollar got a lift from a fresh record high in gold ($1488).

On the week, the New Zealand dollar edged out the yen as the top performer while sterling and CAD trailed the pack. The themes that dominated were a weak U.S. dollar, rising global inflation related to commodities and the European sovereign debt. The S&P 500 declined for the second consecutive week.

U.S. economic data helped improve sentiment and boost CAD and AUD but it wasnt enough to turn the tide against the yen. 1) The U Mich consumer sentiment survey rose to 69.6 (exp: 69.0) from 67.5. 2) U.S. industrial production was good at +0.8% compared to the +0.5% expected. 3) CPI came in at +2.7% y/y (exp: +2.6%) while the ex-food and energy reading was in-line at +1.2%.

ASIA PACIFIC PREVIEW

THE G20 IMF-WORLD BANK meets continue to meet on the weekend. On Friday, the G20 agreed on guidelines to measure imbalances, according to Reuters. The details will be interesting but should not have a short-term fx impact. Brazil is leading developing countries who are fighting for the right to use capital controls. We could see an effort to talk down commodity prices.

THE COMING WEEK opens with New Zealand CPI on Sunday 10:45 pm GMT. The consensus is for a 1.0% q/q rise compared to the +2.3% prior. This pushes the annual rate to 4.6 per cent from 4 per cent in December. Roughly half of the rise is due to a 10% climb in gasoline prices. Look for an ex-energy and fuel reading at close to +0.3% as a better gauge of underlying inflation. The NZD heads into the report with some technical momentum. NZD/USD broke through Nov. 2010 post-recession highs on Friday but fell just short of popping the psychological 0.8000 mark.

LOOK THIS WEEKEND for any headlines from China on inflation as officials digest Thursdays unexpectedly high reading. On Friday a PBOC deputy said there may be some temporary pressures in Q2 but that they still expect to meet the 4% annual target. Any hints at rate increases would weigh on commodities and AUD.

By AB - AshrafLaidi.com Staff