Intraday Market Thoughts

A Tale of Two Factories

by Adam Button
Feb 20, 2014 23:37

February US manufacturing was either the worst in one year or the best in four but the market clearly preferred the good news. The New Zealand dollar was the top performer while its Canadian cousin lagged for the second day. The Asia-Pacific week winds down with the BOJ minutes and UK retail sales later.  Our existing Premium trades include existing trades include GBPUSD, USDJPY, AUDCAD, AUDUSD and NZDUSD.  Canada traders will obtain key figures tomorrow on retail sales and inflation.  For more details, see the latest Premium Insights.

The market is desperate to understand if weather or an economic slowdown is behind the weakness in economic data but the picture is no clearer after a pair of manufacturing surveys on Thursday. The Markit national PMI rose to a four-year high of 56.7 versus 53.0 expected while the Philly-area survey slumped to -6.3 compared the +8.0 consensus, a one-year low.

Initial jobless claims were virtually in-line with the 335K consensus while CPI matched the 1.6% y/y consensus. Negative news came from the China PMI and a sour forecast from Wal-Mart but the market choose to focus on the slice of good news in the Markit report.

USD/JPY rose to 102.40 from as low as 101.67. The S&P 500 rose 11 points to erase the decline from a day earlier.

Another notable moves was the rise in cable. It jumped to 1.6700 after the BOE's Weale said an early rate hike couldn't be ruled out but the pair wasn't able to hold the games and later slumped to a session low of 1.6626. The inability to climb on good news suggests the short-term appetite for the pound is fading but it could also be a case of caution ahead of Friday's retail sales report.

But first, at 2350 GMT, the Bank of Japan releases the minutes of the January 21-22 meeting. The market will be looking for clues on how or when the BOJ could offer further stimulus, especially with the consumption tax looming.

Act Exp Prev GMT
Retail Sales (DEC) (m/m)
-0.4% 0.6% Feb 21 13:30
Retail Sales ex Autos (DEC) (m/m)
0.0% 0.4% Feb 21 13:30
Retail Sales (JAN) (m/m)
-1.0% 2.6% Feb 21 9:30
Retail Sales ex-Fuel (JAN) (m/m)
-1.4% 2.8% Feb 21 9:30
Retail Sales (JAN) (y/y)
5.0% 5.3% Feb 21 9:30
Retail Sales ex-Fuel (JAN) (y/y)
5.0% 6.1% Feb 21 9:30
48.3 49.4 49.5 Feb 20 1:45
BoC CPI Core (JAN) (m/m)
0.1% -0.4% Feb 21 13:30
CPI (JAN) (m/m)
0.1% -0.2% Feb 21 13:30
CPI - Core (JAN) (m/m)
-0.4% Feb 21 13:30
BoC CPI Core (JAN) (y/y)
1.3% 1.3% Feb 21 13:30
CPI (JAN) (y/y)
1.3% 1.2% Feb 21 13:30
Continuing Jobless Claims
2,981K 2,970K 2,944K Feb 20 13:30
Initial Jobless Claims
336K 335K 339K Feb 20 13:30
Jobless Claims 4-Week Avg.
339K 337K Feb 20 13:30

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