Greek Details Awaited, Aussie Jobs See More Losses
Markets appreciated the improving US growth picture on Wednesday as Greek PSI fears died down after repeated assurances from European leaders. Speculation about sterilized Fed bond buys raises as many questions as it answers. The Canadian dollar was top performer on the day while the yen lagged. Australian employment posts another month of unexpected losses. Wednesdays Premium Intermarket Insights chart the latest technical in the S&P500 and the VIX and the potential implications ahead.
A solid ADP employment report emphasized the upward trajectory of the US employment market and provided a modest lift to risk trades following two days of declines. Private February employment increased 216K, virtually dead on the consensus.
Schauble and Rehn both expressed confidence that the PSI deal will meet the required thresholds, allaying some of yesterdays concerns. Bloomberg also reported that publicly announced commitments to the swap account for 58% of outstanding Greek debt.
With the moment of truth looming, it was also a positive that no signs of panic leaked out of Greece.
A WSJ story said the Fed is considering a round of sterilized MBS purchases. First, this is yet another sign that the Fed will continue to hammer away at lingering US economic weakness. Second, this is one of the first signs that officials are somewhat concerned about inflation. For the FX markets those two factors send opposing signals but it is likely the pro-growth side will win out.
Aussie employment showed more losses in February, losing 15.4K after --14.2K in January, vs expectations of +5K. The unemployment rate held steady at 5.2%.
Earlier in the region, New Zealands central bank held rates at 2.50%, as was widely expected. The New Zealand dollar dropped a half-cent as Bollard said the high NZD has been detrimental and that sustained strength would reduce the need for further cuts.
In Japan, negative economic signals continue to point to long-term malaise. The final reading on nominal Q4 GDP was revised to -0.5% from -0.3%. Real GDP, however, was unrevised at -0.2% because deflation was larger than expected.
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