Intraday Market Thoughts

US Consumers Spring to Life, Yen Crushed

by Adam Button
Apr 1, 2014 22:41

US vehicle sales data stole the show from the ISM manufacturing index on Tuesday. The euro was the top performer while the yen lagged. Australian building approvals highlight a quiet Asia-Pacific session.

Outstanding US automotive sales numbers in March pointed to a jump in consumer spending after a cold winter. Total domestic sales were at a 16.33m annual pace compared to 15.8m expected. The bullish case for the US economy (and dollar) is that spending was held back by cold weather and will surge in the Spring. It's early but those numbers point a positive picture.

Several carmaker executives said spending was accelerating at the end of the month so it could be just the beginning of the trend. The market will be looking for confirmation from employment numbers in the ADP survey Wednesday and retail sales numbers later in the month but expectations are climbing. The S&P 500 hit a record 1885 on Tuesday and USD/JPY is flirting with the March high of 103.76.

One area of concern in the data is manufacturing after the ISM survey at 53.7 compared to 54.0 expected. The miss was largely foreshadowed by Markit numbers Monday's Chicago PMI and the market took the numbers in stride.

The Canadian dollar was a standout performer once again after PPI and the RBC manufacturing data beat expectations. The level to watch in the pair is 1.1000. It's held in three consecutive sessions and a fall below could put a harder squeeze on longs.

The rest of the commodity bloc was soft on the day, particularly NZD/USD, which slumped to 0.8633 after touching the highest since 2011.

The focus will mostly be on the Australian dollar with a pair of low-tier indicators on the schedule, both at 0130 GMT. February building approvals are expected up 27.9% y/y as the sector continues to boom. The other release is job vacancies. There is no consensus estimate and the gauge fell 1.7% in Jan.

In today's Premium Insights, we added a new trade in USDJPY-alongside the existing USDJPY. The 3-in-1 chart on USDJPY, 10-year yields and speculative yen futures will be added tomorrow. Full access Premium subscribers
Act Exp Prev GMT
Total Vehicle Sales (MAR)
16.33M 15.80M 15.34M Apr 01 20:00
ISM Prices Paid (MAR)
59 60 60 Apr 01 14:00
Building Approvals (FEB) (m/m)
-2.5% 6.8% Apr 02 0:30
Building Approvals (FEB) (y/y)
34.6% Apr 02 0:30
ADP Employment Change (MAR)
195K 139K Apr 02 12:15
Markit US Manufacturing PMI (MAR) [F]
55.5 56.0 55.5 Apr 01 13:45
ISM Manufacturing PMI (MAR)
53.7 54.0 53.2 Apr 01 14:00
RBC PMI Manufacturing
53.3 52.9 Apr 01 13:30
Eurozone Spanish PMI Manufacturing
52.8 52.9 52.5 Apr 01 7:15
Eurozone PMI Manufacturing
53.0 53.0 53.0 Apr 01 8:00
Eurozone Markit EU PMI Manufacturing (MAR)
53.4 53.8 Apr 01 8:30
Eurozone PPI (FEB) (m/m)
-0.1% -0.3% Apr 02 9:00
Eurozone PPI (FEB) (y/y)
-1.6% -1.4% Apr 02 9:00
Eurozone Unemployment Rate
11.9% 12.0% 11.9% Apr 01 9:00

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