Long March Ends, What Springs in April

We hesitate to over analyse quarter-end moves because of inevitable skews from flows. On the day, CHF was the top performer which is odd for a day when risk trades strengthened. The yen was the laggard on the day and the month; the focus will remain on Japan with the quarterly Tankan data due today.

A glance at the quarter shows a massive divergence in the commodity bloc with AUD and NZD leading and CAD lagging badly. That's a rare occurrence but reflects opposing central bank stances.

The most tradable headlines on the day were from Yellen who said the economy needs extraordinary support for some time. The dollar fell 30 pips across the board with the comments sounding more dovish but the underlying story didn't really change.

Perhaps what the market should have focused on is the economy data, especially the fall in the Chicago PMI to 55.9 from 59.8. It was the lowest since August and featured sharp falls in the employment and new orders components. The survey-takers blamed seasonals but that excuse is wearing thin.

In any case, the ISM manufacturing data is due on Tuesday and that will offer a more definitive impression of the sector.

As April begins, keep in mind that it's historically the strongest month for risk trades by a large margin. The pound has risen in 9 consecutive Aprils and the commodity currencies also tend to be very strong. The US dollar often lags.

It will be a critical month for Japan as the economy reacts to the hike in the consumption tax. The main release is the Q1 Tankan. All the numbers matter but ones to focus on are the large manufacturing index (exp 19) and large manufacturing outlook (exp 13). The numbers are due at 2350 GMT.

The other data point to watch is the official China PMI at 0100 GMT. It's expected at 50.1 compared to 50.2 in February and could certainly make waves in AUD trading.  The revisions to the flash estimate (48.1) from HSBC are also due.