US Data Go Soft and RBA's Stevens Boosts AUD

Weaker-than-expected economic data weighed on risk trades and USD/JPY on Thursday. The yen was the top performer while the euro lagged on soft Eurozone PMIs. Early in the Asia-Pacific region, comments from RBA Governor Stevens have boosted the Australian dollar. New Premium Insights have been issued on Thursday evening: EURUSD (2 dual), USDJPY (1) and GBPUSD (2) ahead of Friday's IFO survey from Germany. The key event remains Tuesday's testimony by Fed Chairman Bernanke. Trades on the rest of the markets will be issued on Friday in an update to the latest Premium Insights.

The market was less-certain of the direction of the US economy after some softer figures. The Philly Fed declined to the lowest since June at -12.5, much worse than the +1.5 reading expected. Initial jobless claims also disappointed with a 362K reading compared to the 355K consensus forecast. The four-week moving average for claims is now moving higher.

The weak numbers weighed on the slumping commodity currencies. USD/CAD rose for the fifth consecutive day and AUD/USD declined to the lowest since October. The industrial metals have declined sharply in the past two weeks, which is flashing a warning sign about the global economy.

A number of Fed officials spoke Thursday and attempted to shed light on the direction of economy and rates but minimal new ground was broken. Fisher and Bullard repeated their usual hawkish rhetoric while San Francisco Fed President Williams said he expects unemployment above 7% through 2014.

Yesterday's FOMC minutes expressed no concern about inflation and that tone is likely to continue after the Feb CPI rose 1.6% year-over-year, precisely in line with estimates.

 In Australia, Stevens boosted AUD/USD a half-cent during testimony to lawmakers. He continued to warn the investment boom was peaking but said China's economy is picking up and that a great deal of stimulus was already in the pipeline. The final comment could indicate an unwillingness to lower rates further.

There are no other noteworthy events in the region.