Intraday Market Thoughts

Weidmann Goes Dovish & Latest Premium Insights

by Adam Button
Apr 17, 2013 23:56

The ECB's Weidman threw the door open to a rate cut and sank the euro back to 1.3000. The US dollar was broadly stronger while risk assets wilted. Japanese trade balance is an upcoming highlight. A new edition of Premium Insights has been issued Thursday's UK retail sales, with new trades on EURUSD, USDJPY, GBPUSD, USDCAD and AUDUSD. The rest of markets will be updated on Thursday.

Euro traders are feeling whipsawed after Tuesday's powerful rally to 1.3200 was completely erased. EUR/USD was already on the soft side when comments from Weidmann crossed. He said the ECB may adjust rates if new information warrants it. The full context of his words was unavailable but the article implied it was in response to a question about a rate cut in May or June.

The euro immediately broke below the 55-day moving average and the cluster of support around 1.3125 and touched as low as 1.3002.

Earlier in the day, former ECB member Bini-Smaghi hinted at official desire for a weaker euro and rumors of French and German downgrades circulated.

Outside of Europe, the Bank of Canada decision was a highlight on the calendar but USD/CAD hardly reacted. The BOC maintained its hawkish bias but lowered growth forecasts, leaving traders unsure which way to go.

That wasn't the case with the Australian dollar as it slumped below 1.03 and the 61.8% retracement of the March/April rally. The culprit was risk aversion as the S&P 500 fell 1.4% and US 10-year yields hit the lowest of the year.

The upcoming Asia-Pacific session features several releases including Chinese property prices and foreign direct investment but the highlight is Japanese trade data at 2350 GMT. Japan has long had trade surpluses but has reported a deficit in each month this year. March numbers are expected to show a half-trillion yen deficit. The BOJ has already acted and weakened the yen but a deficit of more than 1T could begin to put them under pressure to do more.

Act Exp Prev GMT
Adjusted Merchandise Trade Balance (MAR)
¥-934.500B ¥-1,086.581B Apr 17 23:50
Merchandise Trade Balance Total (MAR)
¥-493.3B ¥-777.5B Apr 17 23:50
Retail Sales (MAR) (m/m)
-0.7% 2.1% Apr 18 8:30
Retail Sales ex-Fuel (MAR) (m/m)
-0.5% 1.9% Apr 18 8:30
Retail Sales (MAR) (y/y)
-0.5% 2.6% Apr 18 8:30
Retail Sales ex-Fuel (MAR) (y/y)
0.9% 3.3% Apr 18 8:30

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