Fed-Speak Back in Focus as US Dollar Digests Drop to 2-Week Low

2016-03-31 05:18:00 Ilya Spivak

Talking Points:

US Dollar corrected higher overnight after hitting two-week low vs. majors
Euro may look past Eurozone CPI data on limited implication for ECB bets
Fed-speak back in focus, Evans and Dudley may talk up rate hike outlook

The US Dollar traded broadly higher against its major counterparts in overnight trade as prices corrected after dropping to a two-week low in yesterday’s session. That move followed comments from Fed Chair Janet Yellen that traders (rightly or wrongly) perceived as diminishing the scope for interest rate hikes in 2016. The Japanese Yen diverged from its G10 FX counterparts, managing to narrowly gain against the greenback. The currency’s resilience may reflect a steep skew in overnight borrowing costs ahead of Japan’s fiscal year end.

The preliminary set of March Eurozone CPI figures headlines the data docket in European trading hours. The core year-on-year inflation rate is expected to edge higher to 0.9 percent. If the analogous German figures released yesterday prove telling, an upside surprise could be in store. Such a result seems unlikely to meaningfully buoy the Euro however considering it will hardly discourage the ECB from pursuing the aggressive stimulus effort that policy makers unveiled earlier this month.

The spotlight turns back to Fed-speak later in the day as comments from Chicago and New Fed Presidents Charles Evans and Bill Dudley cross the wires. The tone ought to be familiar, with both officials citing domestic progress toward the central bank’s objectives but warning against potentially disruptive external developments. If this is part of a coordinated communication effort aimed at realigning official and market-based policy bets (as we suspect), the pair may likewise push back a bit against the decidedly dovish interpretations of Yellen’s remarks.

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Asia Session

GMT	CCY	EVENT	ACT	EXP	PREV
23:01	GBP	Lloyds Business Barometer (MAR)	43	-	28
23:05	GBP	GfK Consumer Confidence (MAR)	0	-1	0
00:00	AUD	HIA New Home Sales (MoM) (FEB)	-5.3%	-	0.6%
00:00	NZD	ANZ Activity Outlook (MAR)	29.4	-	25.5
00:00	NZD	ANZ Business Confidence (MAR)	3.2	-	7.1
00:30	AUD	Job Vacancies (FEB)	2.7%	-	4.0%
00:30	AUD	Private Sector Credit (MoM) (FEB)	0.6%	0.5%	0.5%
00:30	AUD	Private Sector Credit (YoY) (FEB)	6.6%	6.5%	6.5%
02:00	NZD	Money Supply M3 (YoY) (FEB)	7.3%	-	7.6%
05:00	JPY	Housing Starts (YoY) (FEB)	7.8%	-2.4%	0.2%
05:00	JPY	Annualized Housing Starts (FEB)	0.974m	0.880m	0.873m
05:00	JPY	Construction Orders (YoY) (FEB)	-12.4%	-	-13.8%

European Session

GMT	CCY	EVENT	EXP	PREV	IMPACT
06:00	EUR	German Retail Sales (MoM) (FEB)	0.4%	-0.1%	Low
06:00	EUR	German Retail Sales (YoY) (FEB)	2.2%	-0.8%	Low
07:00	GBP	BOE’s Carney Speaks at FSB Briefing	-	-	Medium
07:00	EUR	IMF's Lagarde, PBOC's Zhou Speak in Paris	-	-	Medium
07:55	EUR	German Unemployment Change (000's) (MAR)	-6k	-10k	Medium
07:55	EUR	German Unemployment Claims Rate SA (MAR)	6.2%	6.2%	Medium
08:30	GBP	Net Consumer Credit (FEB)	1.3b	1.6b	Low
08:30	GBP	Net Lending Sec. on Dwellings (FEB)	3.6b	3.7b	Low
08:30	GBP	Mortgage Approvals (FEB)	73.5k	74.6k	Low
08:30	GBP	M4 Money Supply (MoM) (FEB)	-	0.0%	Low
08:30	GBP	M4 Money Supply (YoY) (FEB)	-	0.8%	Low
08:30	GBP	M4 Ex IOFCs 3M Annualised (FEB)	4.0%	4.3%	Low
08:30	GBP	GDP (QoQ) (4Q F)	0.5%	0.5%	Medium
08:30	GBP	GDP (YoY) (4Q F)	1.9%	1.9%	Medium
08:30	GBP	Current Account Balance (4Q)	-21.2b	-17.5b	Low
08:30	GBP	Index of Services (MoM) (JAN)	0.2%	0.2%	Low
08:30	GBP	Index of Services (3M/3M) (JAN)	0.8%	0.7%	Low
08:30	GBP	Total Business Investment (QoQ) (4Q F)	-	-2.1%	Low
08:30	GBP	Total Business Investment (YoY) (4Q F)	-	2.4%	Low
09:00	EUR	Eurozone CPI Estimate (YoY) (MAR)	-0.1%	-0.2%	High
09:00	EUR	Eurozone CPI Core (YoY) (MAR A)	0.9%	0.8%	High