AUD/USD Weekly Fundamental Analysis March 5-9, 2012, Forecast

Rule: The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors

Weekly Analysis and Recommendation:

The AUD/USD closed the week at 1.0732, since Monday the currency has traded between 106.51 US cents and 108.57 cents, with the big swings generated by uncertainty over overseas events.

The Aussie currency moved little during the week, due partly to the absence of any major economic data. Most of the activity was USD moves. There has been no real conviction in the move; the market is just coming to terms with the volatility we’ve seen all week.

The Australian dollar received a small boost early on Friday from US economic data that showed the number of people claiming unemployment benefits fell to a four-year low.

Only Good News from the US:

Existing home sales US existing home sales picked up unexpectedly in January, but the previous figures were downwardly revised. 

Initial jobless claims US initial jobless claims stayed unchanged in the week ending February the 18th, while the consensus was looking for an increase.

University of Michigan consumer confidence The final figure of Michigan consumer confidence for February showed a strong upward, revision from 72.5 to 75.3, while only a minor one was expected.

New home sales After increasing for four consecutive months, US new home sales dropped at the start of 2012. 

Federal Reserve Chairman Bernanke testified before the Senate, this week, the markets found his comments a bit dovish and drew conclusions that any additional QA was off the table for the time being. Although the Chairman warned that the economy was recovering, he stated it was fragile and he was still worried about jobs. Gold soared on his comments.

News from the Eurozone

This week starts off with an agreement on the Greek bailout and approval from the EU, ECB and IMF. Greece passes a major hurdle and now needs to complete their agreement with the IIF.

There are worries about the CDS swaps triggering a credit event, at first, the initial ruling ruled that there would be no credit event, but it turns out that ruling was on a very small question concerning the ECB, it seems now that now that Greece has passed the new laws so they can force bondholders to accept the agreement, it will now trigger a credit event and CDS insurance will have to payout.

The ECB, liquidity operation, although successful, loans funds to over 800 banks, in excess of 500 billion euros. Markets are now worried about the consequences.

Spain reported that they will miss their budget deficit target this year, but still remain on track for 2013.

The EU approved the next tranche for Portugal.

The G20 meeting in Mexico ended without any results with non euro nations saying that the eurozone needs to pick up their game and show their money before any others would consider participating.

The EU Summit this past week went off quietly without much in the way of announcements.

Consumer confidence European Commission’s consumer confidence improved for a second straight month in February. Consumer confidence rose from -20.7 to -20.2, marginally weaker than expected (-20.1).

Industrial new orders  Euro zone industrial new orders rebounded by 1.9%  M/M in December, while only a moderate pick up was expected.

IFO business climate indicator The German IFO index rose for a fourth consecutive month in February. The indicator jumped from 108.3 to 109.6, while a more moderate increase was expected.

Manufacturing PMI Euro zone manufacturing PMI extended its rebound in  February, rising for a third consecutive month, but at a  slower pace.  Services PMI After three consecutive increases, euro zone services PMI fell back in February, from 50.4 to 49.4, while a  slight increase was expected.

In January, the euro zone unemployment rate rose unexpectedly. The unemployment rate jumped from an upwardly revised 10.6% (earlier reported as 10.4%) to 10.7%, while the consensus was looking for stabilization at 10.4%. Eurostat estimates that the number of people unemployed rose by 185 000 in the euro area in January, to a total level of 16.925 million. The highest unemployment rates were observed in the Spain (23.3%), Greece (19.9% in November), Ireland and Portugal (both 14.8%). The youth unemployment rate (under 25) was 21.6% in the euro zone. The euro zone unemployment rate is now at the highest level since October 1997 and is just 0.2% below its all time high, suggesting that a jump above the all-time highs is not excluded in the coming months.

News from the Far East

In Australia Prime Minister Gillard won her battle against ex Prime Minister Rudd, who is now retiring from public life.

China’s official purchasing managers’ index (PMI) rose to 51.0 from 50.5 in January.

China also signaled this week that they are considering offering assistance to the EU and the EFSF.

Japan’s unemployment rate inched up to 4.6 per cent in January from a revised 4.5 per cent in the previous month, the government said on Friday. The figure was roughly in line with economists’ forecasts.

The ministry also said January household spending fell by an inflation-adjusted 2.3 per cent year-on-year. The fall was bigger than a 0.8 per cent drop economists had expected.

Japan refrained from selling yen in the foreign-exchange market last month, according to the Finance Ministry.

The nation didn’t sell any of its currency from Jan. 30 to Feb. 27, the ministry’s month-end data posted on its website shows. The yen last week tumbled to an almost nine-month low against the dollar after the Bank of Japan on Feb. 14 unexpectedly added ¥10 trillion to an asset-purchase program and set an inflation goal of 1 percent.

 

Economic Events: (GMT)

Mar. 05

00:30

 

AUD

 

 

 

Company Gross Operating Profits

 

 

 

 

 

 

 

 

15:00

 

USD

 

 

 

ISM Non-Manufacturing Index 

 

 

 

 

 

 

 

Mar. 06

00:30

 

AUD

 

 

 

Current Account 

 

 

 

 

 

 

 

 

03:30

 

AUD

 

 

 

Interest Rate Decision 

 

 

 

 

 

 

 

 

03:30

 

AUD

 

 

 

RBA Rate Statement 

 

 

 

 

 

 

 

Mar. 07

00:30

 

AUD

 

 

 

GDP (QoQ) 

 

 

 

 

 

 

 

 

13:15

 

USD

 

 

 

ADP Nonfarm Employment Change 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Nonfarm Productivity (QoQ) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Unit Labor Costs (QoQ) 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

Interest Rate Decision 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

RBNZ Rate Statement 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

RBNZ Monetary Policy Statement 

 

 

 

 

 

 

 

 

23:50

 

JPY

 

 

 

GDP (QoQ) 

 

 

 

 

 

 

 

 

23:50

 

JPY

 

 

 

GDP Price Index (YoY) 

 

 

 

 

 

 

 

Mar. 08

00:30

 

AUD

 

 

 

Employment Change 

 

 

 

 

 

 

 

 

00:30

 

AUD

 

 

 

NAB Business Confidence 

 

 

 

 

 

 

 

 

00:30

 

AUD

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

Tentative

 

CNY

 

 

 

Chinese Trade Balance 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Continuing Jobless Claims 

 

 

 

 

 

 

 

 

19:00

 

USD

 

 

 

Federal Budget Balance 

 

 

 

 

 

 

 

Mar. 09

00:30

 

AUD

 

 

 

Trade Balance 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese CPI (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Fixed Asset Investment (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Industrial Production (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese PPI (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Retail Sales (YoY) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Average Hourly Earnings (MoM) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Nonfarm Payrolls 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Trade Balance 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

NY Empire State Manufacturing Index 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Private Nonfarm Payrolls 

             

 

1st of the month global economic data releases actual v. forecast

 

AUD

 

 

 

Building Approvals (MoM) 

0.9%

 

2.1% 

 

-1.0% 

 

 

 

AUD

 

 

 

Private New Capital Expenditure (QoQ) 

-0.3%

 

3.9% 

 

14.6% 

   

 

INR

 

 

 

Indian Trade Balance 

-14.8B

 

-11.0B 

 

-12.7B 

 

 

 

CHF

 

 

 

GDP (QoQ) 

0.1%

 

-0.1% 

 

0.3% 

   

 

GBP

 

 

 

Nationwide HPI (MoM) 

0.6%

 

0.3% 

 

-0.3% 

   

 

CHF

 

 

 

SVME PMI 

49.0

 

48.5 

 

47.3 

 

 

 

EUR

 

 

 

French Manufacturing PMI 

50.0

 

50.2 

 

50.2 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

50.2

 

50.1 

 

50.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

49.0

 

49.0 

 

49.0 

 

 

 

PLN

 

 

 

Polish GDP (YoY) 

4.3%

 

4.2% 

 

4.2% 

 

 

 

GBP

 

 

 

Manufacturing PMI 

51.2

 

52.0 

 

52.0 

   

 

EUR

 

 

 

CPI (YoY) 

2.7%

 

2.6% 

 

2.6% 

 

 

 

EUR

 

 

 

Unemployment Rate 

10.7%

 

10.4% 

 

10.6% 

   

 

USD

 

 

 

Core PCE Price Index (MoM) 

0.2%

 

0.2% 

 

0.1% 

   

 

CAD

 

 

 

Current Account 

-10.3B

 

-9.6B 

 

-12.3B 

   

 

USD

 

 

 

Personal Spending (MoM) 

0.2%

 

0.4% 

 

0.0% 

 

 

 

USD

 

 

 

Initial Jobless Claims 

351K

 

353K 

 

353K 

   

 

USD

 

 

 

Continuing Jobless Claims 

3402K

 

3400K 

 

3404K 

   

 

USD

 

 

 

ISM Manufacturing Index 

52.4

 

54.6 

 

54.1 

 

 

 

USD

 

 

 

Fed Chairman Bernanke Testifies 

 

 

 

 

 

 

 

 

KRW

 

 

 

South Korean CPI (YoY) 

3.1%

 

3.5% 

 

3.4% 

 

 

 

JPY

 

 

 

Unemployment Rate 

4.6%

 

4.5% 

 

4.6% 

 

 

 

JPY

 

 

 

Tokyo Core CPI (YoY) 

-0.3%

 

-0.4% 

 

-0.4% 

 

 

 

Government Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

NZD/USD Weekly Fundamental Analysis March 5-9, 2012, Forecast

Rule: The recent strength of the kiwi, a currency sometimes overlooked by traders, made its moves much more predictable. This applies to support and resistance lines alike. This is a very safe pair to trade, not a great deal of volatility but predictability.

Analysis and Recommendation:

NZD/USD is trading at 0.8291. The New Zealand dollar rose against most currencies as equity markets continued their ascent, stoking risk appetite and demand for currencies such as the kiwi. The Australian dollar and to a lesser extent the kiwi took heart from Chinese manufacturing figures on Thursday, which showed China’s official purchasing managers’ index (PMI) rose to 51.0 from 50.5 in January. Otherwise there was little excitement here. As the week ended the USD picked up strength and continued through the weekend. With very little economic news from NZ, the kiwi will simply respond to the over strength and weakness of the USD. Expect the greenback to be strong this week

Only Good News from the US:

Existing home sales US existing home sales picked up unexpectedly in January, but the previous figures were downwardly revised. 

Initial jobless claims US initial jobless claims stayed unchanged in the week ending February the 18th, while the consensus was looking for an increase.

University of Michigan consumer confidence The final figure of Michigan consumer confidence for February showed a strong upward, revision from 72.5 to 75.3, while only a minor one was expected.

New home sales After increasing for four consecutive months, US new home sales dropped at the start of 2012. 

Federal Reserve Chairman Bernanke testified before the Senate, this week, the markets found his comments a bit dovish and drew conclusions that any additional QA was off the table for the time being. Although the Chairman warned that the economy was recovering, he stated it was fragile and he was still worried about jobs. Gold soared on his comments.

News from the Eurozone

This week starts off with an agreement on the Greek bailout and approval from the EU, ECB and IMF. Greece passes a major hurdle and now needs to complete their agreement with the IIF.

There are worries about the CDS swaps triggering a credit event, at first, the initial ruling ruled that there would be no credit event, but it turns out that ruling was on a very small question concerning the ECB, it seems now that now that Greece has passed the new laws so they can force bondholders to accept the agreement, it will now trigger a credit event and CDS insurance will have to payout.

The ECB, liquidity operation, although successful, loans funds to over 800 banks, in excess of 500 billion euro. Markets are now worried about the consequences.

Spain reported that they will miss their budget deficit target this year, but still remain on track for 2013.

The EU approved the next tranche for Portugal.

The G20 meeting in Mexico ended without any results with non euro nations saying that the eurozone needs to pick up their game and show their money before any others would consider participating.

The EU Summit this past week went off quietly without much in the way of announcements.

Consumer confidence European Commission’s consumer confidence improved for a second straight month in February. Consumer confidence rose from -20.7 to -20.2, marginally  weaker than expected (-20.1).

Industrial new orders  Euro zone industrial new orders rebounded by 1.9%  M/M in December, while only a moderate pick up was expected.

IFO business climate indicator The German IFO index rose for a fourth consecutive month in February. The indicator jumped from 108.3 to 109.6, while a more moderate increase was expected.

Manufacturing PMI Euro zone manufacturing PMI extended its rebound in  February, rising for a third consecutive month, but at a  slower pace.  Services PMI After three consecutive increases, euro zone services PMI fell back in February, from 50.4 to 49.4, while a  slight increase was expected.

In January, the euro zone unemployment rate rose unexpectedly. The unemployment rate jumped from an upwardly revised 10.6% (earlier reported as 10.4%) to 10.7%, while the consensus was looking for stabilization at 10.4%. Eurostat estimates that the number of people unemployed rose by 185 000 in the euro area in January, to a total level of 16.925 million. The highest unemployment rates were observed in the Spain (23.3%), Greece (19.9% in November), Ireland and Portugal (both 14.8%). The youth unemployment rate (under 25) was 21.6% in the euro zone. The euro zone unemployment rate is now at the highest level since October 1997 and is just 0.2% below its all time high, suggesting that a jump above the all-time highs is not excluded in the coming months.

News from the Far East

In Australia Prime Minister Gillard won her battle against ex Prime Minister Rudd, who is now retiring from public life.

China’s official purchasing managers’ index (PMI) rose to 51.0 from 50.5 in January.

China also signaled this week that they are considering offering assistance to the EU and the EFSF.

Japan’s unemployment rate inched up to 4.6 per cent in January from a revised 4.5 per cent in the previous month, the government said on Friday. The figure was roughly in line with economists’ forecasts.

The ministry also said January household spending fell by an inflation-adjusted 2.3 per cent year-on-year. The fall was bigger than a 0.8 per cent drop economists had expected.

Japan refrained from selling yen in the foreign-exchange market last month, according to the Finance Ministry.

Historical

Highest: 0.8816 USD on 31 Jul 2011.

Average: 0.7543 USD over this period.

Lowest: 0.6619 USD on 07 Jun 2010.


 

Economic Events: (GMT)

Mar. 05

00:30

 

AUD

 

 

 

Company Gross Operating Profits

 

 

 

 

 

 

 

 

15:00

 

USD

 

 

 

ISM Non-Manufacturing Index 

 

 

 

 

 

 

 

Mar. 06

00:30

 

AUD

 

 

 

Current Account 

 

 

 

 

 

 

 

 

03:30

 

AUD

 

 

 

Interest Rate Decision 

 

 

 

 

 

 

 

 

03:30

 

AUD

 

 

 

RBA Rate Statement 

 

 

 

 

 

 

 

Mar. 07

00:30

 

AUD

 

 

 

GDP (QoQ) 

 

 

 

 

 

 

 

 

13:15

 

USD

 

 

 

ADP Nonfarm Employment Change 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Nonfarm Productivity (QoQ) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Unit Labor Costs (QoQ) 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

Interest Rate Decision 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

RBNZ Rate Statement 

 

 

 

 

 

 

 

 

20:00

 

NZD

 

 

 

RBNZ Monetary Policy Statement 

 

 

 

 

 

 

 

 

23:50

 

JPY

 

 

 

GDP (QoQ) 

 

 

 

 

 

 

 

 

23:50

 

JPY

 

 

 

GDP Price Index (YoY) 

 

 

 

 

 

 

 

Mar. 08

00:30

 

AUD

 

 

 

Employment Change 

 

 

 

 

 

 

 

 

00:30

 

AUD

 

 

 

NAB Business Confidence 

 

 

 

 

 

 

 

 

00:30

 

AUD

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

Tentative

 

CNY

 

 

 

Chinese Trade Balance 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Initial Jobless Claims 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Continuing Jobless Claims 

 

 

 

 

 

 

 

 

19:00

 

USD

 

 

 

Federal Budget Balance 

 

 

 

 

 

 

 

Mar. 09

00:30

 

AUD

 

 

 

Trade Balance 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese CPI (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Fixed Asset Investment (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Industrial Production (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese PPI (YoY) 

 

 

 

 

 

 

 

 

02:00

 

CNY

 

 

 

Chinese Retail Sales (YoY) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Average Hourly Earnings (MoM) 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Nonfarm Payrolls 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Trade Balance 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Unemployment Rate 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

NY Empire State Manufacturing Index 

 

 

 

 

 

 

 

 

13:30

 

USD

 

 

 

Private Nonfarm Payrolls 

             

 

1st of the month global economic data releases actual v. forecast

 

AUD

 

 

 

Building Approvals (MoM) 

0.9%

 

2.1% 

 

-1.0% 

 

 

 

AUD

 

 

 

Private New Capital Expenditure (QoQ) 

-0.3%

 

3.9% 

 

14.6% 

   

 

INR

 

 

 

Indian Trade Balance 

-14.8B

 

-11.0B 

 

-12.7B 

 

 

 

CHF

 

 

 

GDP (QoQ) 

0.1%

 

-0.1% 

 

0.3% 

   

 

GBP

 

 

 

Nationwide HPI (MoM) 

0.6%

 

0.3% 

 

-0.3% 

   

 

CHF

 

 

 

SVME PMI 

49.0

 

48.5 

 

47.3 

 

 

 

EUR

 

 

 

French Manufacturing PMI 

50.0

 

50.2 

 

50.2 

 

 

 

EUR

 

 

 

German Manufacturing PMI 

50.2

 

50.1 

 

50.1 

 

 

 

EUR

 

 

 

Manufacturing PMI 

49.0

 

49.0 

 

49.0 

 

 

 

PLN

 

 

 

Polish GDP (YoY) 

4.3%

 

4.2% 

 

4.2% 

 

 

 

GBP

 

 

 

Manufacturing PMI 

51.2

 

52.0 

 

52.0 

   

 

EUR

 

 

 

CPI (YoY) 

2.7%

 

2.6% 

 

2.6% 

 

 

 

EUR

 

 

 

Unemployment Rate 

10.7%

 

10.4% 

 

10.6% 

   

 

USD

 

 

 

Core PCE Price Index (MoM) 

0.2%

 

0.2% 

 

0.1% 

   

 

CAD

 

 

 

Current Account 

-10.3B

 

-9.6B 

 

-12.3B 

   

 

USD

 

 

 

Personal Spending (MoM) 

0.2%

 

0.4% 

 

0.0% 

 

 

 

USD

 

 

 

Initial Jobless Claims 

351K

 

353K 

 

353K 

   

 

USD

 

 

 

Continuing Jobless Claims 

3402K

 

3400K 

 

3404K 

   

 

USD

 

 

 

ISM Manufacturing Index 

52.4

 

54.6 

 

54.1 

 

 

 

USD

 

 

 

Fed Chairman Bernanke Testifies 

 

 

 

 

 

 

 

 

KRW

 

 

 

South Korean CPI (YoY) 

3.1%

 

3.5% 

 

3.4% 

 

 

 

JPY

 

 

 

Unemployment Rate 

4.6%

 

4.5% 

 

4.6% 

 

 

 

JPY

 

 

 

Tokyo Core CPI (YoY) 

-0.3%

 

-0.4% 

 

-0.4% 

 

 

 

Government Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Natural Gas Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The U.S. Energy Information Administration estimates that U.S. natural gas pipeline companies added about 2,400 miles of new pipe to the grid as part of over 25 projects in 2011. New pipeline projects entered service in parts of the U.S. natural gas grid that can be congested: California, Florida, and parts of the Northeast Only a portion of this capacity serves incremental natural gas use; most of these projects facilitate better linkages across the existing natural gas grid.

By convention, the industry expresses annual capacity additions as the sum of the capacities of all the projects completed in that year. By this measure, the industry added 13.7 billion cubic feet per day (Bcf/d) of new capacity to the grid in 2011. The six largest projects put into service in 2011 added 1,553 miles and about 8.2 Bcf/d of new capacity to the system. Much of this new capacity is for transporting natural gas between states rather than within states. Golden Pass, Ruby Pipeline, FGT Phase VIII, Pascagoula Expansion, and Bison Pipeline projects added 6.1 Bcf/d, or about 80%, of new state-to-state capacity.

Natural gas pipeline capacity additions in 2011 were well above the 10 Bcf/d levels typical from 2001-2006, roughly the same as additions in 2007 and 2010, but significantly below additions in 2008 and 2009 (see chart below). Capacity added in 2008 and 2009 reflected a mix of intrastate and interstate natural gas pipeline expansions, related mostly to shale production, liquefied natural gas (LNG) terminals, and storage facilities.

This over production, without new uses or demands has increased inventories and pushed Natural Gas prices below estimates and projections. Natural Gas hit a bottom in February of 2.32 but moved back up to 2.80 on unimportant news and predictions of cold weather, and then begin to fall back down to find a bottom. NG as is trading around 2.47 at present and will most likely fall to the 2.42 number in March and then drop again when winter is officially over.

Natural Gas Inventory (EIA)

Summary from the EIA report

Average daily power prices in the Northeast and Midwest from the beginning of November 2011 through the first week of February have been unusually low. The driving factor is warm weather. Warm winter weather decreases the demand for electricity, which puts downward pressure on prices. The warm weather also cuts demand for natural gas, both as a heating fuel and as a fuel for power generation. This acts to hold down natural gas spot prices, which in turn decreases the cost of generating power.

Northeastern and Midwestern wholesale power prices typically are linked closely to natural gas prices, since natural gas-fired generators are often the marginal provider of power, and the marginal generator sets the power price in those markets. This connection is illustrated by the close tracking of the natural gas price (red line) and power price (blue line) in the chart above. This winter, warm weather and robust natural gas supplies moderated natural gas prices.

Cold weather around January 4 and January 16 contributed to higher spot natural gas and power prices in hubs in New York and New England. While the average January temperature at the LaGuardia Airport in New York City was 37°F, on January 4, the average daily temperature dipped to 19°F, and the average daily temperature was under 25°F on January 15 and 16.

During colder weather, demand for natural gas as a heating fuel increases, raising the spot market prices for natural gas, and therefore, for power as well. Northeastern price spikes are typically caused by natural gas pipeline capacity constraints on the natural gas grid serving this region and may not show up in other regions (see prices at Mid-Atlantic and Midwestern hubs below).

  • The return of warmer-than normal temperatures was likely the catalyst that caused natural gas prices to resume their multi-week downtrend. The Henry Hub price closed at $2.44 per million British thermal units (MMBtu) on February 29, down 16 cents for the week.
  • At the New York Mercantile Exchange (NYMEX), the April 2012 natural gas contract fell 15.9 cents per MMBtu for the week to close at $2.616 per MMBtu.
  • Working natural gas in storage eased slightly last week to 2,513 billion cubic feet (Bcf) as of Friday, February 24, according to the U.S. Energy Information Administration’s (EIA) Weekly Natural Gas Storage Report (WNGSR). The implied net withdrawal for the week was 82 Bcf, positioning storage volumes 756 Bcf above year-ago levels.
  • The natural gas rotary rig count, as reported February 24 by Baker Hughes Incorporated, decreased by 6 to 710 active units. Meanwhile, oil-directed rigs dropped by 7 to 1,265 units.

 

Historic Chart

 

March Major Economic Events

WEEKLY

 

Gold Monthly Fundamental Forecast March 2012

Outlook and Recommendation

Following the sharp gains for Gold prices during January when gold prices rose by 11% and the situation in February was much different. Gold price increased by only 2.07% from the end of January. What were the events and decisions that may have affected the direction of gold. Part of it might have to do with the recent decision of the EU leaders to approve the bailout package for Greece.

Gold prices started February with little changes; this no-trend, however soon turned into sharp gains.

If we separate February into two parts: with the breaking point at February 17th; during the first part of February, gold declined by 0.8%. During the second part of February, gold price climbed by 2.9%.

During the first part of February, the U.S dollar slightly depreciated against the Euro, the Canadian and Australian dollar; the last two currencies are usually strongly correlated with gold; during the second part of February, the U.S dollar sharply depreciated mainly against the Euro; this shift might partly explain the sharp increase of gold during the second part of the month.

Although this simplifies everything, there were a great deal of geopolitical problems, financial and economic crisis and turmoil, throughout the world, but mostly from the eurozone. When the markets are uneasy they turn to gold, and we saw this several times over the past few months. Global problems have no subsided, but investors are becoming more confident in the handling of these problems by the EU and are therefore taking on more risk. With slow but steady improvement in the US, investors are moving from the USD and Gold looking for more appealing investments. The short term for Gold will be a continued fall to trade between 1675 and 1700 throughout the end of the month and to increase over the second quarter moving towards 1800.

Understanding Gold:

When fundamental AND technical forces are in alignment, as with the current situation in gold, price action traders have an extremely valuable opportunity because trading with price action allows for much more accurate entries than other methods as well as providing traders with a “set and forget” style of trading when used in combination with simple risk to reward scenarios.

Gold prices always rise when there is uncertainty in the global economy. In times of uncertainty, wealthy investors tend to run towards gold. Suppose, rumors are flying high about some event in the world and this is increasing the uncertainty in the financial markets. Gold prices are on the rise again. You now buy three gold contracts. By the end of the week, each contract is up by 100 points. You make a cool $3,000 when you sell the three contracts. This way, you complete your third trade in a series of four trades.

This is a very simple gold trading strategy that depends on pyramiding your position with a series of four trades and removing all the profit from your account at the end of these four trades. With practice, you will find this gold trading strategy very simple and easy to implement.

  • Gold reacts to uncertainity in the markets A drop in major currencies can indicate a run into gold. Remember investors tend to take profit from gold so watch for trading opportunties when investors are taking profits, not moving out of the markets.

 

Historical

High:     1916.20

Low:      1321.10

Gold Forecast Chart

 

Crude Oil Monthly Fundamental Forecast March 2012

Outlook and Recommendation

Analysts expect the price of West Texas Intermediate (WTI) crude oil to average about $100 per barrel in 2012, almost $6 per barrel more than the average price last year.  Based on recent futures and options data, the market believes there is about a one-in-fifteen chance that the average WTI price in June 2012 will exceed $125 per barrel, and about a one-in-fifty chance that it would exceed $140 per barrel.  For 2013, Economists expect WTI prices to continue to rise, reaching $106 per barrel next year.  The current forecast assumes that U.S. real gross domestic product (GDP) grows by 2.0 percent in 2012 and 2.4 percent in 2013, while world real GDP (weighted by oil consumption) grows by 2.9 percent and 3.7 percent in 2012 and 2013, respectively.

Revisions to the fourth-quarter GDP figures confirmed the original estimate, the US economy advanced at the fastest pace in six quarters. Over 90% of the advance was accounted for by inventory rebuilding and stronger motor vehicle sales. However, inventories remain historically high and turnover ratios suggest consumption will remain depressed.

There have been several developments associated with crude oil market over the last month but none have provided new direction to prices. A dispute over oil transportation and transfer fees between South Sudan and its northern neighbor, Sudan, have resulted in reports that South Sudan has shut in its production of about 350,000 barrels per day. Additionally, the European Union agreed last week to impose a ban of all oil imports from Iran into its member countries beginning in July of this year, which could lead to a reallocation of global crude oil flows. Lastly, negotiations for a voluntary write-down of Greek debt are continuing between the government and its bondholders, a reminder of continuing financial challenges impacting economies within the Euro zone, which still have the potential to affect near-term economic growth prospects and demand for petroleum products.

Geopolitical tensions between Iran and the West and the pressures of the oil embargo, will keep prices on the high side through March. The average price of Crude Oil should hold close to the 106.00 per barrel, but should begin to fall as tensions decline and as Libyan oil comes back on line faster than expected. OPEC continues to pump more oil to cover the shortages created by Iran. As the summer demand season approaches we should see oil begin to rise, and with predictions of better economic situation and improved production the demand for oil should increase.

Crude Oil Inventory (EIA)

U.S. crude oil refinery inputs averaged 14.6 million barrels per day during the week ending February 24, 282 thousand barrels per day below the previous week’s average. Refineries operated at 83.6 percent of their operable capacity last week. Gasoline production decreased last week, averaging about 8.9 million barrels per day. Distillate fuel production decreased slightly last week, averaging just under 4.3 million barrels per day.

U.S. crude oil imports averaged nearly 9.2 million barrels per day last week, up by 96 thousand barrels per day from the previous week. Over the last four weeks, crude oil imports have averaged about 8.9 million barrels per day, 539 thousand barrels per day above the same four-week period last year.

U.S. commercial crude oil inventories (excluding those in the Strategic Petroleum Reserve) increased by 4.2 million barrels from the previous week. At 344.9 million barrels, U.S. crude oil inventories are in the upper limit of the average range for this time of year.

Historic Chart

 

March Major Economic Events

 

USD/CAD Monthly Fundamental Forecast March 2012

Outlook and Recommendation

Recent Canadian economic indicators have been mixed, but remain consistent with an economy at the turn of the year that was expanding around a modest 2% pace. Improving US consumer and manufacturing activity is supporting a revival in industrial production and exports. In particular, stronger-than-expected North American vehicle sales have prompted automakers to schedule a further increase in auto assemblies in early 2012. Nonetheless, the persistent   strength of the Canadian dollar combined with the subdued pace of growth in the US – still the destination of over 70% of Canada’s international shipments – will remain significant hurdles to a faster export recovery.

Consumer confidence has inched up this year The Canadian dollar (CAD) is up only 0.7% vs. the USD in February, underperforming most majors. The movement in the CAD has been relatively limited and has centered around parity while also flirting with the 200 day moving average. Similar to most currencies, CAD gains have been the result of USD weakness due to the extensive amounts of liquidity provided by global central banks. We anticipate that the CAD will continue to benefit from international investment diversification flows given its relatively strong sovereign fundamentals, considering the continued focus on credit ratings in the current environment. Canada’s fiscal and debt metrics are better than most of its developed country peers, with the exception of Australia, and there is a firm commitment to returning to a government surplus within the next five years. In terms of economic data, they remain mildly bullish given that Canada saw the majority of its gains in economic activity front-loaded in the current cycle.

Investor sentiment indicators are bullish USD/CAD. On the global front we anticipate strong emerging market growth, with a soft landing expected in China, which should support growth sensitive currencies like the CAD. Periods of risk aversion will continue to drive short-term drops in CAD, and downside risks to the global financial system remain below the surface despite central bank action; however, the potential for significant downward movement is limited and the longer-term trend remains bullish CAD. The forecast the CAD to end Q1 2012 at 0.98. The Looney should end the first quarter trading in the same range holding close to the 99.00-98.00 range

Central Bank

The Bank of Canada pulled forward its projection for the closing of the output gap to 2013Q3; but, a week later, the Fed said that rate hikes aren’t likely until at least late 2014. The Bank will remain comfortably on hold through 2012 and much of 2013; but, if the Monetary Policy Report projection and Fed expectations stay unchanged, 2013 will be an interesting year for Policymakers.

Official Rate: 1.00% • Quantitative Easing: No • Last Decision: January 17, unch • Next Decision: March 8, Hold

Historic Chart


March Major Economic Events

country

date

name

forecast

previous

Canada

20120306 15:00:00

Ivey Purchasing Managers Index

62.3

55.7

Canada

20120308 13:15:00

Housing Starts s.a (YoY)

198.0K

197.9K

Canada

20120309 12:00:00

Unemployment Rate

7.60%

7.60%

Canada

20120309 12:00:00

Net Change in Employment

13.9K

2.3K

Canada

20120321 12:30:00

Leading Indicators (MoM)

 

0.70%

Canada

20120322 12:30:00

Retail Sales (MoM)

 

-0.20%

Canada

20120323 11:00:00

Bank of Canada Consumer Price Index

 

0.20%

Canada

20120323 11:00:00

Bank of Canada Consumer Price Index

 

2.10%

Canada

20120323 11:00:00

Consumer Price Index (MoM)

 

0.40%

Canada

20120323 11:00:00

Consumer Price Index (YoY)

 

2.50%

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy (YoY)

 

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

 

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

 

2.60%

 

USD/JPY Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The first few months of 2012 have been marked by a risk rally, where equities and commodities have been strong and the US dollar (USD) has weakened materially. The foundation for this was laid by G4 central bank policy that has succeeded in decreasing much of the tail risk than hung over markets in 2011. Developments in Europe continue to be a key concern; however, markets have rewarded the euro (EUR) as several important hurdles have been passed. All is not solved, but shifts in central bank policy, economic fundamentals and investor sentiment have all soothed near-term fears. On the back of this, volatility across asset classes has collapsed, adding to the incentive to participate in the carry trade (selling lower yielding instruments to buy higher yielders). Flows into equities and emerging markets have been strong, supporting on-USD currencies. Outside of Europe, geopolitical risk and rising oil prices are complicating the economic outlook materially and pose a significant risk for 2012.

The US currency environment is dominated by the US economic outlook, flows and the broader movement of the US dollar. For the USD, the improving economic outlook and dollar positive flows stemming from the European crisis have been offset by historically loose US monetary policy that includes quantitative easing and rising oil prices. There are limits to how long the US economy can withstand a strong currency. Accordingly, we expect the USD to trend lower this year against most currencies except the EUR and JPY.

 Asian currencies are widely expected to rally against the USD, with one major  exception, the Japanese yen (JPY). The Bank of Japan’s decision to increase its asset purchase program and institute an inflation target (2% in the medium term, but 1% for the time being) surprised markets. The combination of this, shifting trade dynamics and a low volatility environment has finally eased the strengthening bias of yen. We expect bouts of risk aversion to equate to bouts of yen strength, but that the overall trend remains one of weakness.

The Japanese yen USD/JPY has fallen 5.3% in February, given aggressive easing from the BoJ that followed a deterioration of trade data. Investors have reacted negatively to the shift in policy, and have reduced their net long position from US$9.3 billion to US$2.7 billion in recent weeks. Movement in USDJPY has broken the limited range seen sincemid-2011 and is consolidating above the key 80.00 level. Expect USDJPY ascent to be interrupted by periods of risk aversion and hold a Q4 2012 target of 82.00, moving to 78-79.00 range at the end of the first quarter and gradually moving to reach the 82.00 level.

 Central Bank

The Bank of Japan expanded its quantitative easing initiative ¥10 trillion to ¥65 trillion in February. In addition, the BoJ stated explicitly that it will target 1% inflation “for the time being”, a change from the previous 0%-to-2% target range, noting that it will conduct policy with the aim of achieving that goal. That suggests more easing is possible this year, despite the new purchases being spread over the rest of 2012. However, the yen’s recent swoon should bring some relief to policy makers, which could preclude another move if the weaker trend continues. Expect no new policy measures in March.

Official Rate: 0%-to-0.10% • Quantitative Easing: Yes • Last Decision: Feb. 13-14, QE • Next Decision: March 12-13, Hold

Historic Chart

 

March Major Economic Events

country

date

name

forecast

previous

Japan

20120306 01:30:00

Labor Cash Earnings (YoY)

-0.30%

-0.20%

Japan

20120307 05:00:00

Leading Economic Index

95.1

94

Japan

20120307 23:50:00

Gross Domestic Product (QoQ)

0.30%

1.40%

Japan

20120307 23:50:00

Gross Domestic Product Annualized

-0.60%

5.60%

Japan

20120308 05:00:00

Eco Watchers Survey: Current

46.3

44.1

Japan

20120308 05:00:00

Eco Watchers Survey: Outlook

 

47.1

Japan

20120308 06:00:00

Machine Tool Orders (YoY)

 

15.80%

Japan

20120311 23:50:00

Core Machinery Orders (MoM)

 

-7.10%

Japan

20120312 05:00:00

Consumer Confidence Index

 

40

Japan

20120314 04:30:00

Industrial Production (YoY)

 

-4.30%

Japan

20120321 23:50:00

Merchandise Trade Balance Total

 

ֲ¥-1475B

Japan

20120328 23:50:00

Large Retailer’s Sales

 

-1%

Japan

20120328 23:50:00

Retail Trade (YoY)

 

1.90%

Japan

20120329 23:30:00

National Consumer Price Index (YoY)

0.10%

Japan

20120329 23:30:00

National CPI Ex Food, Energy (YoY)

 

-0.90%

Japan

20120329 23:30:00

National CPI Ex-Fresh Food (YoY)

 

-0.10%

Japan

20120329 23:30:00

Overall Household Spending (YoY)

 

-2.30%

Japan

20120329 23:30:00

Unemployment Rate

 

4.60%

Japan

20120329 23:50:00

Industrial Production (YoY)

 

-1.20%

Japan

20120330 05:00:00

Housing Starts (YoY)

 

-1.10%

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy (YoY)

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

 

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

2.60%

 

AUD/USD Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The Australian dollar AUD/USD will remain well supported over the forecast horizon. Firm external and improving fiscal account fundamentals, strong ties to Asia and exposure to highly bid commodities all work in favor of the AUD. The currency’s closing in on the multi-year peak levels observed in mid-2011 is noteworthy particularly in the face of a 7% y/y fall in Australia’s terms of trade, with rising demand for the country’s bonds in the midst of the eurozone sovereign crisis a likely explanation. Headline inflation at 3.1% y/y has converged towards the Reserve Bank of Australia’s (RBA) 2-3% target, as core goods inflation containment is backed by a strong AUD. Core services items, however, continue to advance at the strongest pace in three years, pointing to persistent local pressures, as implied by favorable conditions within the mining sector where investment spending continues to propel ahead. While labor markets are less strained in non-mining activities, there is no evidence of slack, with the unemployment rate broadly steady at 5.2%. The downtrend in inflation and an uncertain global outlook, combined with evidence of a cooler real estate market, opened the door for looser monetary conditions. After lowering the cash rate twice to 4.25% RBA authorities left the benchmark rate unchanged the last time around, judging current conditions in favor of an economic expansion broadly in line with trend

Early 2012 gains in the Australian dollar (AUD) slowed in February as the tailwind of liquidity provided by global central bank easing has abated. Although AUDUSD remains at the upper end of its six-month range, near 1.0775, further upward movement has been limited as a result of financial sector credit downgrades, cautious central bank rhetoric, and a flare-up in political tension. Despite the limited movement, investors are bullish AUD with CFTC data showing a net long US$8.0 billion position. Expect continued AUD appreciation with a Q4 2012 target of 1.09. holding tight at the end of the current quarter in the upper 1.07 to low 1.08 range

Central Bank

The Reserve Bank of Australia surprised markets by holding rates steady in February, defying rate cut expectations. Since then, the data have been relatively solid and the global environment has improved modestly, meaning little reason to expect a move in March. Indeed, interest rates are “close to their medium-term average” and “with growth expected to be close to trend and inflation close to target” there’s no urgency to act.

Official Rate: 4.25% • Quantitative Easing: No • Last Decision: February 7, unch • Next Decision: March 6, .25 basis point

Historic Chart


 

March Major Economic Events

country

date

name

forecast

previous

Australia

20120306 22:30:00

AiG Performance of Construction Index

 

39.8

Australia

20120307 00:30:00

Gross Domestic Product (QoQ)

0.70%

1.00%

Australia

20120307 00:30:00

Gross Domestic Product (YoY)

2.30%

2.50%

Australia

20120308 00:30:00

Employment Change s.a.

 

46.3K

Australia

20120313 00:30:00

National Australia Bank’s Business Con

 

4

Australia

20120313 23:30:00

Westpac Consumer Confidence

 

4.20%

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy

 

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

 

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

 

2.60%

 

NZD/USD Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The incredible run by the New Zealand dollar(NZD) so far in 2012 is bound to lose momentum in the coming months as the Reserve Bank of New Zealand(RBNZ) further supports the country’s economic recovery. While the RBNZ decided to leave the official cash rate unchanged at 2.5% after the latest monetary policy meeting, inflationary trends are now placed at the bottom of the 1-3%comfort zone, implying that further economic support is likely to be in the cards. Headline inflation came down significantly to 1.8% y/y in the fourth quarter of 2011, with both tradable goods and non-tradable items displaying fading pressures. Costs in externally exposed sectors have been underpinned by NZD strength, while excess capacity conditions seem to prevail in locally oriented industries. Limited signs of reinvigorating household spending have paired with reconstruction efforts in the Canterbury region adversely affected by last year’s Christchurch earthquake. The fall in New Zealand’s unemployment rate to 6.3% at the last reading was underpinned by a narrower participation rate, and therefore points towards remaining economic slack.

The US currency environment is dominated by the US economic outlook, flows and the broader movement of the US dollar. For the USD, the improving economic outlook and dollar positive flows stemming from the European crisis have been offset by historically loose US monetary policy that includes quantitative easing and rising oil prices. There are limits to how long the US economy can withstand a strong currency. Accordingly, we expect the USD to trend lower this year against most currencies

The New Zealand dollar (NZD) has seen movement in February mimicking that of its major currency commodity peer AUD. While the trend in NZD/USD remains bullish, the pace of gains has slowed. Investors favor NZD and are net long US$2.0 billion, however the recent rally has not allowed for a full retracement to mid-2011 highs near 0.8800.We are bullish NZD with a Q4 2012 target of 0.83.

Central Bank

The Reserve Bank of New Zealand held rates steady in January, noting that “the global economy remains fragile and risks to the outlook remain.” The Bank will keep a watchful eye on the global outlook and likely stay on the sidelines until conditions stabilize. The rebuilding following multiple earthquakes will lift growth; but, with inflation “well contained” and downside economic risks persisting, the RBNZ is comfortable NEW ZEALAND standing firm.

Official Rate: 2.50% • Quantitative Easing: No • Last Decision: January 26, unch • Next Decision: March 8, Hold

Historic Chart


March Major Economic Events

country

date

name

forecast

previous

Australia

20120306 22:30:00

AiG Performance of Construction Index

 

39.8

Australia

20120307 00:30:00

Gross Domestic Product (QoQ)

0.70%

1.00%

Australia

20120307 00:30:00

Gross Domestic Product (YoY)

2.30%

2.50%

Australia

20120308 00:30:00

Employment Change s.a.

 

46.3K

Australia

20120313 00:30:00

National Australia Bank’s Business Con

 

4

Australia

20120313 23:30:00

Westpac Consumer Confidence

 

4.20%

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy

 

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

 

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

 

2.60%

 

GBP/USD Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The economic outlook for the UK has has improved over the last few months. In light of better-than expected results from the PMI surveys (particularly the services index), as well as improving retail sales and trade data, we have upwardly revised our GDP forecast for this year from 0.7% to 1.0%. The main drivers behind the UK’s0.9% overall expansion in 2011 were net exports and government spending, while slumping consumption and investment offset the advance. The monthly trade deficit reached its lowest level since 2003 in December, though this was primarily the result of a drop in imports. Household consumption should remain fairly subdued in the near term, constrained by unemployment (at a multi-year high of 8.4%)and still elevated inflation. Although we continue to expect gradual disinflation through most of 2012 (the CPI rate declined from 4.2% y/y to 3.6% in January), the downtrend may not be as steep as previously anticipated, given the recent rise in oil prices and a small possibility of further quantitative easing by the Bank of England (BoE).The British pound (GBP) has surpassed our bullish expectations. The fundamentals remain miserably weak, on both the economic and monetary policy fronts; however the UK has a fiscal plan in place and it’s a Triple-A rated sovereign with a developed bond market(a rarity in the current environment). Accordingly, the flow side of sterling remains favorable and should support the currency into year-end.

Revisions to the fourth-quarter GDP figures confirmed the original estimate, the US economy advanced at the fastest pace in six quarters. Over 90% of the advance was accounted for by inventory rebuilding and stronger motor vehicle sales, as supply chain disruptions of the Tohoku earthquake dissipated. However, stockpiles remain historically low, and turnover ratios suggest restocking is occurring at a slower pace than final demand, a reflection of conservative business sentiment. Amid an uncertain global economic outlook, US economic indicators have been more upbeat in recent months, reducing some of the downside risks. This should not, however, be used to extrapolate a stronger growth pattern for the year. The US economy continues to face cyclical and structural headwinds, amplified by the ongoing European debt crisis and the recent surge in oil prices. Aside from a still-cautious sentiment, domestic challenges include fiscal consolidation, political discord, and uncertainty over the presidential election results, and ongoing deleveraging.

The British pound GBP/USD has remained range-bound in February, between 1.5650 and 1.5900, given mixed economic data driven by consumption but offset by balance sheet expansion from the BoE. Although sentiment indicators are bearish with a net short US$3.1 billion position, they have been improving since the fall of2011. We expect GBP to remain a beneficiary of intra-European diversification flows and we hold a Q1 2012 forecast of1.58 and a Q4 target of 1.63.

Central Bank

The Bank of England pulled the trigger on another £50 bln in asset purchases at the February meeting which will take place over three months. The Inflation Report maintained a downbeat growth forecast, though the risks to inflation were seen as “broadly balanced” despite expectations it would remain below target through much of the forecast horizon. Even so, with inflation projected to be sub-2% into 2015, the risks are skewed toward further easing if the data don’t improve over the next quarter. Expect a short statement with no policy changes in March.

Official Rate: 0.50% • Quantitative Easing: Yes • Last Decision: February 8-9, QE • Next Decision: March 7-8, Hold

Historic Chart

 

March Major Economic Events

country

date

name

forecast

previous

U.K.

20120305 09:28:00

Purchasing Manager Index Services

54.8

56

U.K.

20120308 12:00:00

BoE Asset Purchase Facility

ֲ£325B

ֲ£325B

U.K.

20120309 09:30:00

Industrial Production (MoM)

0.40%

0.50%

U.K.

20120309 09:30:00

Industrial Production (YoY)

-3.10%

-3.30%

U.K.

20120309 09:30:00

Manufacturing Production (YoY)

0.20%

0.80%

U.K.

20120309 09:30:00

Producer Price Index – Input (YoY) n.s.a

7.10%

7.00%

U.K.

20120309 09:30:00

Producer Price Index – Output (YoY) n.s.a

2.50%

4.10%

U.K.

20120309 15:00:00

NIESR GDP Estimate (3M)

 

-0.20%

U.K.

20120313 00:01:00

RICS Housing Price Balance

 

-16%

U.K.

20120314 09:30:00

Average Earnings

 

2%

U.K.

20120314 09:30:00

Average Earnings

 

2%

U.K.

20120314 09:30:00

Claimant Count Change

 

6.9K

U.K.

20120314 09:30:00

Claimant Count Rate

 

5%

U.K.

20120314 09:30:00

ILO Unemployment Rate (3M)

 

8.40%

U.K.

20120320 09:30:00

Consumer Price Index (MoM)

 

-0.50%

U.K.

20120320 09:30:00

Consumer Price Index (YoY)

 

3.60%

U.K.

20120321 09:30:00

Bank of England Minutes

   

U.K.

20120322 09:30:00

Retail Sales (YoY)

 

2%

U.K.

20120322 09:30:00

Retail Sales ex-Fuel (YoY)

 

1.90%

U.K.

20120326 06:00:00

Nationwide Housing Prices n.s.a

 

0.90%

U.K.

20120328 08:30:00

Gross Domestic Product (QoQ)

 

-0.20%

U.K.

20120328 08:30:00

Gross Domestic Product (YoY)

 

0.70%

U.K.

20120329 00:01:00

Gfk Consumer Confidence

 

-29

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy (YoY)

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

2.60%

 

EUR/GBP Monthly Fundamental Forecast March 2012

Outlook and Recommendation

EUR Investors have been cheered by some better-than-expected data in recent weeks, as well as the substantial banking sector liquidity boost from the European Central Bank’s (ECB) second three-year long-term refinancing operation (LTRO), and progress on the Greek debt deal. However, the euro zone continues to face a number of headwinds to growth and the risks to the outlook remain balanced to the downside. We continue to forecast a mild recession for 2012 overall, with varying degrees of severity in the different member states. A contraction of close to ½%this year is expected to be followed by a fragile recovery and growth of around 1% in 2013. Europe is particularly vulnerable to financial and political shocks at present, which could impede both fiscal consolidation efforts and economic activity. One notable risk relates to the recent rise in oil prices on escalating tensions surrounding Iran’s nuclear program. The EU’s embargo on Iranian oil imports will take effect on July 1st, though the sanctions have already affected global oil markets, with the price of Brent oil increasing by about 15% year-to-date. Euro area price pressures moderated in January, with the annual inflation rate edging down from 2.7% y/y to 2.6%. Although the ECB’s upcoming staff projections for inflation will likely be revised upward, with the growth outlook remaining subject to a high degree of uncertainty, we continue to anticipate a 25 basis point reduction in the main refinancing rate at the March 9th ECB meeting (to bring the rate to a record-low 0.75%).

While The economic outlook for the UK has brightened over the last few months. In light of better-than expected results from the PMI surveys (particularly the services index), as well as improving retail sales and trade data, we have upwardly revised our GDP forecast for this year from 0.7% to 1.0%. The main drivers behind the UK’s0.9% overall expansion in 2011 were net exports and government spending, while slumping consumption and investment offset the advance. The monthly trade deficit reached its lowest level since 2003 in December, though this was primarily the result of a drop in imports. Household consumption should remain fairly subdued in the near term, constrained by unemployment (at a multi-year high of 8.4%)and still elevated inflation. Although we continue to expect gradual disinflation through most of 2012 (the CPI rate declined from 4.2% y/y to 3.6% in January), the downtrend may not be as steep as previously anticipated, given the recent rise in oil prices and a small possibility of further quantitative easing by the Bank of England (BoE).The British pound (GBP) has surpassed our bullish expectations. The fundamentals remain miserably weak, on both the economic and monetary policy fronts; however the UK has a fiscal plan in place and it’s a Triple-A rated sovereign with a developed bond market (a rarity in the current environment). Accordingly, the flow side of sterling remains favorable and should support the currency into year-end.

The British pound EUR/GBP has remained relatively range-bound in February, and expect to find it trading close to the 0.84 level at the end of the current quarter, headed to 0.81 by early summer.

Central Bank

The Bank of England began another £50 billion in asset purchases at the February meeting which will take place over three months. The Inflation Report maintained a downbeat growth forecast, though the risks to inflation were seen as “broadly balanced” despite expectations it would remain below target through much of the forecast horizon. Even so, with inflation projected to be sub-2% into 2015, the risks are skewed toward further easing if the data don’t improve over the next quarter. Expect a short statement with no policy changes in March.

Official Rate: 0.50% • Quantitative Easing: Yes • Last Decision: February 8-9, QE • Next Decision: March 7-8, Hold

Historic Chart

 

March Major Economic Events

country

date

name

forecast

previous

United Kingdom

20120305 09:28:00

Purchasing Manager Index Services

54.8

56

United Kingdom

20120308 12:00:00

BoE Asset Purchase Facility

ֲ£325B

ֲ£325B

United Kingdom

20120309 09:30:00

Industrial Production (MoM)

0.40%

0.50%

United Kingdom

20120309 09:30:00

Industrial Production (YoY)

-3.10%

-3.30%

United Kingdom

20120309 09:30:00

Manufacturing Production (YoY)

0.20%

0.80%

United Kingdom

20120309 09:30:00

Producer Price Index – Input (YoY) n.s.a

7.10%

7.00%

United Kingdom

20120309 09:30:00

Producer Price Index – Output (YoY) n.s.a

2.50%

4.10%

United Kingdom

20120309 15:00:00

NIESR GDP Estimate (3M)

 

-0.20%

United Kingdom

20120313 00:01:00

RICS Housing Price Balance

 

-16%

United Kingdom

20120314 09:30:00

Average Earnings excluding Bonus (3Mo/Yr)

 

2%

United Kingdom

20120314 09:30:00

Average Earnings including Bonus (3Mo/Yr)

 

2%

United Kingdom

20120314 09:30:00

Claimant Count Change

 

6.9K

United Kingdom

20120314 09:30:00

Claimant Count Rate

 

5%

United Kingdom

20120314 09:30:00

ILO Unemployment Rate (3M)

 

8.40%

United Kingdom

20120320 09:30:00

Consumer Price Index (MoM)

 

-0.50%

United Kingdom

20120320 09:30:00

Consumer Price Index (YoY)

 

3.60%

United Kingdom

20120321 09:30:00

Bank of England Minutes

   

United Kingdom

20120322 09:30:00

Retail Sales (YoY)

 

2%

United Kingdom

20120322 09:30:00

Retail Sales ex-Fuel (YoY)

 

1.90%

United Kingdom

20120326 06:00:00

Nationwide Housing Prices n.s.a (YoY)

 

0.90%

United Kingdom

20120328 08:30:00

Gross Domestic Product (QoQ)

 

-0.20%

United Kingdom

20120328 08:30:00

Gross Domestic Product (YoY)

 

0.70%

United Kingdom

20120329 00:01:00

Gfk Consumer Confidence

 

-29

         

Germany

20120305 08:53:00

Purchasing Manager Index Services

52.6

53.7

Eurozone

20120305 08:58:00

Purchasing Manager Index Services

49.4

50.4

Eurozone

20120305 09:30:00

Sentix Investor Confidence

-7

-11.1

Eurozone

20120305 10:00:00

Retail Sales (MoM)

0.00%

-0.40%

Eurozone

20120305 10:00:00

Retail Sales (YoY)

-1.50%

-1.60%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (QoQ)

-0.30%

0.20%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (YoY)

-0.70%

1.40%

Germany

20120307 11:00:00

Factory Orders s.a. (MoM)

0.80%

1.70%

Germany

20120307 11:00:00

Factory Orders n.s.a. (YoY)

-1.70%

0.00%

Germany

20120308 11:00:00

Industrial Production s.a. w.d.a. (YoY)

1.10%

0.90%

Germany

20120309 07:00:00

Consumer Price Index (MoM)

0.70%

-0.40%

Germany

20120309 07:00:00

Consumer Price Index (YoY)

2.30%

2.10%

Eurozone

20120312 00:00:00

EU Finance Ministers meeting

   

Germany

20120313 10:00:00

ZEW Survey – Current Situation

 

40.3

Germany

20120313 10:00:00

ZEW Survey – Economic Sentiment

 

5.4

Germany

20120320 07:00:00

Producer Price Index (YoY)

 

3.40%

Germany

20120322 08:28:00

Purchasing Manager Index Manufacturing

 

50.2

Germany

20120322 08:28:00

Purchasing Manager Index Services

 

52.6

Germany

20120326 06:00:00

Retail Sales (MoM)

 

-1.60%

Germany

20120326 06:00:00

Retail Sales (YoY)

 

1.60%

Germany

20120326 08:00:00

IFO – Business Climate

 

109.6

Germany

20120326 08:00:00

IFO – Current Assessment

 

117.5

Germany

20120326 08:00:00

IFO – Expectations

 

102.3

Germany

20120327 06:00:00

Gfk Consumer Confidence Survey

 

6

Germany

20120329 07:55:00

Unemployment Change

 

 

Germany

20120329 07:55:00

Unemployment Rate s.a.

 

6.80%

EUR/CHF Monthly Fundamental Forecast March 2012

Outlook and Recommendation

The Swiss economy will stagnate this year; we expect weak external demand and investment activity to limit growth to less than ¼%. Real exports fell 3.4%m/m in January (in seasonally adjusted terms) as the manufacturing PMI declined to 47.3. The PMI has sat below theneutral-50 threshold since September. Like many of its wealthy European peers, the economy should register a moderate pace of recovery next year, advancing by around1¾%. Deflation remains a considerable threat which could push the economy into recession; the consumer price index fell for a fourth consecutive month in January on a year over-year basis, with the pace of decline accelerating to0.8% y/y. If deflationary pressures intensify over the coming months, the SNB will likely opt to raise the currency floor, though with oil prices rising steadily year-to-date, the likelihood of this occurring has diminished. The next monetary policy announcement is on March 15th. Swiss fundamental and financial metrics remain very strong; the fiscal account is roughly balanced, public debt is declining and government bond yields are lower than their German and US counterparts. The central bank (SNB) continues to highlight the extreme CHF valuation, leaving open the risk that once leadership at the SNB is cemented the floor will shift

Stability in the Swiss franc (CHF) has continued into February as a result of the SNB’s EURCHF floor set at 1.2000. Market participants’ comfort with the floor has allowed for a further narrowing in the EURCHF range, now generally limited between 1.2000 and 1.2100, and investors remain bearish with a net short US$2.7 billion position. Expect EURCHF to close Q4 2012 at 1.24, recognizing that the authorities likely favor a 1.25 floor once leadership is more cemented at the central bank.

Whereas in the Eurozone, investors have been cheered by some better-than-expected data in recent weeks, as well as the substantial banking sector liquidity boost from the European Central Bank’s (ECB) second three-year long-term refinancing operation (LTRO), and progress on the Greek debt deal. However, the euro zone continues to face a number of headwinds to growth and the risks to the outlook remain balanced to the downside. We continue to forecast a mild recession for 2012 overall, with varying degrees of severity in the different member states. A contraction of close to ½%this year is expected to be followed by a fragile recovery and growth of around 1% in 2013. Europe is particularly vulnerable to financial and political shocks at present, which could impede both fiscal consolidation efforts and economic activity. One notable risk relates to the recent rise in oil prices on escalating tensions surrounding Iran’s nuclear program. The EU’s embargo on Iranian oil imports will take effect on July 1st, though the sanctions have already affected global oil markets, with the price of Brent oil increasing by about 15% year-to-date. Euro area price pressures moderated in January, with the annual inflation rate edging down from 2.7% y/y to 2.6%. Although the ECB’s upcoming staff projections for inflation will likely be revised upward, with the growth outlook remaining subject to a high degree of uncertainty, we continue to anticipate a 25 basis point reduction in the main refinancing rate at the March 9th ECB meeting (to bring the rate to a record-low 0.75%).

Central Bank

The European Central Bank held rates steady for a second straight month in February, with signs of stabilizing economic data outweighing any concerns about recession and the debt crisis. Despite the decent data of late, we are unconvinced that the worst has passed in the Euro Area. Further easing remains possible but likely not in March. The sizeable bid at the second 3-year LTRO should be heartening for the ECB, especially in light of the increase in bank lending to start 2012. If bank lending contracts consistently again, further LTROs are possible.

Official Rate: 1.00% • Quantitative Easing: No • Last Decision: February 9, unch • Next Decision: March 8, Hold

Authorities at the Swiss National Bank(SNB) will remain committed to preventing excessive appreciation of the Swiss franc (CHF) over the forecast horizon. Investor confidence in the SNB’s ability to maintain the current floor (currently set at CHF 1.20 per euro) is strong and the foreign exchange target is regarded as a credible monetary policy instrument

Historic Chart

 

March Major Economic Events

country

date

name

forecast

previous

Switzerland

20120305 08:15:00

Real Retail Sales (YoY)

2.10%

0.60%

Switzerland

20120307 06:45:00

Unemployment Rate n.s.a (MoM)

3.10%

3.40%

Switzerland

20120308 08:15:00

Consumer Price Index (MoM)

0.20%

-0.40%

Switzerland

20120308 08:15:00

Consumer Price Index (YoY)

-0.90%

-0.80%

Switzerland

20120314 10:00:00

ZEW Survey – Expectations

 

-21.2

Switzerland

20120327 06:00:00

UBS Consumption Indicator

 

0.92

Switzerland

20120330 07:00:00

KOF Leading Indicator

 

-0.12

         

Germany

20120305 08:53:00

Purchasing Manager Index Services

52.6

53.7

Eurozone

20120305 08:58:00

Purchasing Manager Index Services

49.4

50.4

Eurozone

20120305 09:30:00

Sentix Investor Confidence

-7

-11.1

Eurozone

20120305 10:00:00

Retail Sales (MoM)

0.00%

-0.40%

Eurozone

20120305 10:00:00

Retail Sales (YoY)

-1.50%

-1.60%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (QoQ)

-0.30%

0.20%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (YoY)

-0.70%

1.40%

Germany

20120307 11:00:00

Factory Orders s.a. (MoM)

0.80%

1.70%

Germany

20120307 11:00:00

Factory Orders n.s.a. (YoY)

-1.70%

0.00%

Germany

20120308 11:00:00

Industrial Production s.a. w.d.a. (YoY)

1.10%

0.90%

Germany

20120309 07:00:00

Consumer Price Index (MoM)

0.70%

-0.40%

Germany

20120309 07:00:00

Consumer Price Index (YoY)

2.30%

2.10%

Eurozone

20120312 00:00:00

EU Finance Ministers meeting

   

Germany

20120313 10:00:00

ZEW Survey – Current Situation

 

40.3

Germany

20120313 10:00:00

ZEW Survey – Economic Sentiment

 

5.4

Germany

20120320 07:00:00

Producer Price Index (YoY)

 

3.40%

Germany

20120322 08:28:00

Purchasing Manager Index Manufacturing

50.2

Germany

20120322 08:28:00

Purchasing Manager Index Services

52.6

Germany

20120326 06:00:00

Retail Sales (MoM)

 

-1.60%

Germany

20120326 06:00:00

Retail Sales (YoY)

 

1.60%

Germany

20120326 08:00:00

IFO – Business Climate

 

109.6

Germany

20120326 08:00:00

IFO – Current Assessment

 

117.5

Germany

20120326 08:00:00

IFO – Expectations

 

102.3

Germany

20120327 06:00:00

Gfk Consumer Confidence Survey

 

6

Germany

20120329 07:55:00

Unemployment Change

 

 

Germany

20120329 07:55:00

Unemployment Rate s.a.

 

6.80%

USD/CHF Monthly Fundamental Forecast March 2012

Outlook and Recommendation

Revisions to the fourth-quarter GDP figures confirmed the original estimate, the US economy advanced at the fastest pace in six quarters. Over 90% of the advance was accounted for by inventory rebuilding and stronger motor vehicle sales, as supply chain disruptions of the Tohoku earthquake dissipated. However, stockpiles remain historically low, and turnover ratios suggest restocking is occurring at a slower pace than final demand, a reflection of conservative business sentiment. Amid an uncertain global economic outlook, US economic indicators have been more upbeat in recent months, reducing some of the downside risks. This should not, however, be used to extrapolate a stronger growth pattern for the year. The US economy continues to face cyclical and structural headwinds, amplified by the ongoing European debt crisis and the recent surge in oil prices. Aside from a still-cautious sentiment, domestic challenges include fiscal consolidation, political discord, and uncertainty over the presidential election results, and ongoing deleveraging.

The first few months of 2012 have been marked by a risk rally, where equities and commodities have been strong and the US dollar (USD) has weakened materially. The foundation for this was laid by G4 central bank policy that has succeeded in decreasing much of the tail risk than hung over markets in 2011. Developments in Europe continue to be a key concern; however, markets have rewarded the euro (EUR) as several important hurdles have been passed. All is not solved, but shifts in central bank policy, economic fundamentals and investor sentiment have all soothed near-term fears. On the back of this, volatility across asset classes has collapsed, adding to the incentive to participate in the carry trade.

The Swiss economy will stagnate this year; we expect weak external demand and investment activity to limit growth to less than ¼%. Real exports fell 3.4%m/m in January (in seasonally adjusted terms) as the manufacturing PMI declined to 47.3. The PMI has sat below theneutral-50 threshold since September. Like many of its wealthy European peers, the economy should register a moderate pace of recovery next year, advancing by around1¾%. Deflation remains a considerable threat which could push the economy into recession; the consumer price index fell for a fourth consecutive month in January on a year over-year basis, with the pace of decline accelerating to0.8% y/y. If deflationary pressures intensify over the coming months, the SNB will likely opt to raise the currency floor, though with oil prices rising steadily year-to-date, the likelihood of this occurring has diminished. The next monetary policy announcement is on March 15th. Swiss fundamental and financial metrics remain very strong; the fiscal account is roughly balanced, public debt is declining and government bond yields are lower than their German and US counterparts. The USD/CHF should trade around the 0.92 level heading towards 0.97 at the end of the second quarter.

 Central Bank

Authorities at the Swiss National Bank(SNB) will remain committed to preventing excessive appreciation of the Swiss franc (CHF) over the forecast horizon. Investor confidence in the SNB’s ability to maintain the current floor (currently set at CHF 1.20 per euro) is strong and the foreign exchange target is regarded as a credible monetary policy instrument

Historic Chart


March Major Economic Events

country

date

name

forecast

previous

Switzerland

20120305 08:15:00

Real Retail Sales (YoY)

2.10%

0.60%

Switzerland

20120307 06:45:00

Unemployment Rate n.s.a (MoM)

3.10%

3.40%

Switzerland

20120308 08:15:00

Consumer Price Index (MoM)

0.20%

-0.40%

Switzerland

20120308 08:15:00

Consumer Price Index (YoY)

-0.90%

-0.80%

Switzerland

20120314 10:00:00

ZEW Survey – Expectations

 

-21.2

Switzerland

20120327 06:00:00

UBS Consumption Indicator

 

0.92

Switzerland

20120330 07:00:00

KOF Leading Indicator

 

-0.12

         

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy (YoY)

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

2.60%


EUR/USD Monthly Fundamental Forecast March 2012

Central Bank

Recovering U.S. economic data through year end were only briefly mentioned in the Fed’s last Statement. Instead, caution remained, with the downside risks highlighted again. The still-weak growth outlook, along with the release of FOMC fed funds forecasts, prompted policymakers to vote to keep rates “exceptionally low” until at least late 2014. No changes in rates or other easing moves are expected at the March meeting.

Official Rate: 0%-to-0.25% • Quantitative Easing: On Hold • Last Decision January 24-25, unch • Next Decision: March 13, Hold

The European Central Bank held rates steady for a second straight month in February, with signs of stabilizing economic data outweighing any concerns about recession and the debt crisis. Despite the decent data of late, we are unconvinced that the worst has passed in the Euro Area. Further easing remains possible but likely not in March. The sizeable bid at the second 3-year LTRO should be heartening for the ECB, especially in light of the increase in bank lending to start 2012. If bank lending contracts consistently again, further LTROs are possible.

Official Rate: 1.00% • Quantitative Easing: No • Last Decision: February 9, unch • Next Decision: March 8, Hold

Outlook and Recommendation

The EUR/USD  has rallied early in 2012. The combination of an agreement on Greeks, ECB policy, a broadly weaker USD and repatriation flows have all supported the retracement. In addition, rising oil prices limits the ability of the ECB to cut interstates in the future; leaving the EUR as an unlikely bull story. However, the hurdles ahead are large and we executer to fade from current levels and trend towards1.25 later this year. The euro (EUR) has rebounded considerably, reaching new highs in February approaching 1.35 following the approval of Greek aid and ahead of additional policy accommodation from the ECB. Despite the recent rally, a sentiment indicated by CFTC data remains bearish, with a near-record net short position at US$23.5 billion. We anticipate EUR to decline into year end and hold a target of 1.25. The decline should begin towards the end of the first quarter finding the euro trading slightly above the 1.30 level

The first few months of 2012 have been marked by a risk rally, where equities and commodities have been strong and the US dollar (USD) has weakened materially. The foundation for this was laid by G4 central bank policy that has succeeded in decreasing much of the tail risk than hung over markets in 2011. Developments in Europe continue to be a key concern; however, markets have rewarded the euro (EUR) as several important hurdles have been passed. All is not solved, but shifts in central bank policy, economic fundamentals and investor sentiment have all soothed near-term fears. On the back of this, volatility across asset classes has collapsed, adding to the incentive to participate in the carry trade (selling lower yielding instruments to buy higher yielders). Flows into equities and emerging markets have been strong, supporting on-USD currencies. Outside of Europe, geopolitical risk and rising oil prices are complicating the economic outlook materially and pose a significant risk for 2012.

The US currency environment is dominated by the US economic outlook, flows and the broader movement of the US dollar. For the USD, the improving economic outlook and dollar positive flows stemming from the European crisis have been offset by historically loose US monetary policy that includes quantitative easing and rising oil prices. There are limits to how long the US economy can withstand a strong currency. Accordingly, we expect the USD to trend lower this year against most currencies.

Revisions to the fourth-quarter GDP figures confirmed the original estimate, the US economy advanced at the fastest pace in six quarters. Over 90% of the advance was accounted for by inventory rebuilding and stronger motor vehicle sales, as supply chain disruptions of the Japanese earthquake dissipated. However, stockpiles remain historically low, and turnover ratios suggest restocking is occurring at a slower pace than final demand, a reflection of conservative business sentiment. Amid an uncertain global economic outlook, US economic indicators have been more upbeat in recent months, reducing some of the downside risks. This should not, however, be used to extrapolate a stronger growth pattern for the year. The US economy continues to face cyclical and structural headwinds, amplified by the ongoing European debt crisis and the recent surge in oil prices. Aside from a still-cautious sentiment, domestic challenges include fiscal consolidation, political discord, and uncertainty over the presidential election results, and ongoing deleveraging.

Historic Chart


March Major Economic Events

country

date

name

forecast

previous

USA

20120309 13:30:00

Nonfarm Payrolls

207K

243K

USA

20120309 13:30:00

Unemployment Rate

8.30%

8.30%

USA

20120313 19:00:00

FOMC Minutes

   

USA

20120316 12:30:00

Consumer Price Index (YoY)

 

2.90%

USA

20120316 12:30:00

Consumer Price Index Ex Food & Energy (YoY)

 

2.10%

USA

20120329 13:30:00

Gross Domestic Product Annualized

 

1.80%

USA

20120329 13:30:00

Gross Domestic Purchases Price Index

 

2.60%

         
         

Germany

20120305 08:53:00

Purchasing Manager Index Services

52.6

53.7

Eurozone

20120305 08:58:00

Purchasing Manager Index Services

49.4

50.4

Eurozone

20120305 09:30:00

Sentix Investor Confidence

-7

-11.1

Eurozone

20120305 10:00:00

Retail Sales (MoM)

0.00%

-0.40%

Eurozone

20120305 10:00:00

Retail Sales (YoY)

-1.50%

-1.60%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (QoQ)

-0.30%

0.20%

Eurozone

20120306 10:00:00

Gross Domestic Product s.a. (YoY)

-0.70%

1.40%

Germany

20120307 11:00:00

Factory Orders s.a. (MoM)

0.80%

1.70%

Germany

20120307 11:00:00

Factory Orders n.s.a. (YoY)

-1.70%

0.00%

Germany

20120308 11:00:00

Industrial Production s.a. w.d.a. (YoY)

1.10%

0.90%

Germany

20120309 07:00:00

Consumer Price Index (MoM)

0.70%

-0.40%

Germany

20120309 07:00:00

Consumer Price Index (YoY)

2.30%

2.10%

Eurozone

20120312 00:00:00

EU Finance Ministers meeting

   

Germany

20120313 10:00:00

ZEW Survey – Current Situation

 

40.3

Germany

20120313 10:00:00

ZEW Survey – Economic Sentiment

 

5.4

Germany

20120320 07:00:00

Producer Price Index (YoY)

 

3.40%

Germany

20120322 08:28:00

Purchasing Manager Index Manufacturing

 

50.2

Germany

20120322 08:28:00

Purchasing Manager Index Services

 

52.6

Germany

20120326 06:00:00

Retail Sales (MoM)

 

-1.60%

Germany

20120326 06:00:00

Retail Sales (YoY)

 

1.60%

Germany

20120326 08:00:00

IFO – Business Climate

 

109.6

Germany

20120326 08:00:00

IFO – Current Assessment

 

117.5

Germany

20120326 08:00:00

IFO – Expectations

 

102.3

Germany

20120327 06:00:00

Gfk Consumer Confidence Survey

 

6

Germany

20120329 07:55:00

Unemployment Change

 

 

Germany

20120329 07:55:00

Unemployment Rate s.a.

 

6.80%


Crude Oil Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

WEEKLY

08:00             GBP       Halifax House Price Index (MoM)                           0.1%                      0.6%

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

  08:15           CHF       CPI (MoM)

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                                                                                             

 08:15            CHF        Retail Sales (YoY)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                   

09:30             GBP      Services PMI

The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                                

 10:00            EUR        Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                   

 15:00            USD       ISM Non-Manufacturing Index

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

Analysis and Recommendations:

Crude Oil continues to fall from highs over 110.00 earlier this week. Crude closed the week at 106.54 down 2.30. Crude was falling on Thursday when rumors of an explosion of an Egyptian pipeline drove prices back up. The rumors turned out to be false calming the markets. Recently there has been a lot of rhetoric coming from Iran as well as aggressive attitudes from Israel and pressures from the US and EU while the embargo continues to have its effects. As the noise turned down, investors were less worried about supply disruptions. Also the release of February OPEC data shows an increase in production by OPEC members to offset the loss of oil from Iran and Libya is coming back on line faster than anticipated. Inventories earlier in the week were higher than expected also. Compounded by rumors that the Obama Administration might release oil from the strategic reserves, helped push prices down. On Friday, the USD surged pushing down commodities traded in US currency.


A very quiet Friday for Economic Data: actual v. forecast

 

 

NZD

 

 

ANZ Commodity Price Index (MoM) 

0.0%

     

1.1%

 

 

 

EUR

 

 

German Retail Sales (MoM) 

-1.6%

 

0.5%

 

0.1%

   

 

GBP

 

 

Construction PMI 

54.3

 

51.3

 

51.4

 

 

 

EUR

 

 

PPI (MoM) 

0.7%

 

0.5%

 

-0.2%

 

 

 

CAD

 

 

GDP (MoM) 

0.4%

 

0.3%

 

-0.1%

 

 

 

Sovereign Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14 

Natural Gas Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

WEEKLY

 

Analysis and Recommendations:

Natural Gas stayed in a tight trading range today, closing the day just about where it began. NG is trading currently at 2.482 having opened at 2.481. NG will continue to stay range bound until investors give up and move from their positions, as the winter days move past us, investors are hoping for one last blast of cold to push the prices back up or a news story that will give one last surge before Gas creeps to a bottom and sits there for months to come.


Gold Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

Just a heads up since gold is volatile and will react to most economic indicators we will begin to post the daily calendar with events that could affect the price of gold. The gold price is sensitive to a number of scheduled U.S. and Euro area macroeconomic announcements—including retail sales, non-farm payrolls, and inflation. Gold’s high sensitivity to real interest rates and its unique role as a safe-haven and store of value typically leads to a counter-cyclical reaction to surprise news, in contrast to their commodities. It also shows a particularly high sensitivity to negative surprises that might lead financial investors to become more risk averse.  

These results have a number of implications. To reduce the uncertainty of the return on gold transactions, traders may wish to time their orders flow so as to avoid the release of information that has been shown to affect prices. For longer-term market participants, these results provide confirmation of the pro-cyclical bias of many commodities and gold’s role as a safe-haven during periods of economic uncertainty.

08:00     GBP       Halifax House Price Index (MoM)                           0.1%                      0.6%

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

  08:15   CHF       CPI (MoM)

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                                                                                                             

 08:15    CHF        Retail Sales (YoY)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

09:30     GBP      Services PMI

The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                                       

 10:00    EUR        Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

 15:00    USD       ISM Non-Manufacturing Index

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

Analysis and Recommendations:

Gold closed at 1713.35 down again today as investors are seen as still unwinding their long positions, or bets prices would go up, as their hopes of more U.S. economic stimulus were dashed. The USD moved up today as the euro fell. Crude fell as rumors of the pipeline explosion were proven false and the conflict with Iran settled down. Investors turned back to USD.


A very quiet Friday for Economic Data: actual v. forecast

 

 

NZD

 

 

ANZ Commodity Price Index (MoM) 

0.0%

     

1.1%

 

 

 

EUR

 

 

German Retail Sales (MoM) 

-1.6%

 

0.5%

 

0.1%

   

 

GBP

 

 

Construction PMI 

54.3

 

51.3

 

51.4

 

 

 

EUR

 

 

PPI (MoM) 

0.7%

 

0.5%

 

-0.2%

 

 

 

CAD

 

 

GDP (MoM) 

0.4%

 

0.3%

 

-0.1%

 

 

 

Sovereign Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14 

USD/CAD Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

08:00     GBP       Halifax House Price Index (MoM)                           0.1%                      0.6%

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

  08:15   CHF       CPI (MoM)

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                                                                                                             

 08:15    CHF        Retail Sales (YoY)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

09:30     GBP      Services PMI

The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                                       

 10:00    EUR        Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

 15:00    USD       ISM Non-Manufacturing Index

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

Analysis and Recommendations:

The USD/CAD is trading at 0.9889 up slightly from.09854. U.S. dollar rose 0.4% against major rivals, pressuring prices of commodities that are benchmarked in the currency on mixed signals from the EU and some news on CDS credit events. In continuing drama from Greece, the International Swaps and Derivatives Association is considering triggering credit default swap payouts due to collective action clauses. The question before the Assn earlier this week was based on the fact that the ECB was given different consideration for its bonds then other bond holders. The current question is quite different.

There was little action south of the Canadian border, Crude Oil and Gold both fell today.

 

A very quiet Friday for Economic Data: actual v. forecast

 

 

NZD

 

 

ANZ Commodity Price Index (MoM) 

0.0%

     

1.1%

 

 

 

EUR

 

 

German Retail Sales (MoM) 

-1.6%

 

0.5%

 

0.1%

   

 

GBP

 

 

Construction PMI 

54.3

 

51.3

 

51.4

 

 

 

EUR

 

 

PPI (MoM) 

0.7%

 

0.5%

 

-0.2%

 

 

 

CAD

 

 

GDP (MoM) 

0.4%

 

0.3%

 

-0.1%

 

 

 

Sovereign Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14 

EUR/GBP Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

08:00     GBP       Halifax House Price Index (MoM)                           0.1%                      0.6%

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

  08:15   CHF       CPI (MoM)

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                                                                                                             

 08:15    CHF        Retail Sales (YoY)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

09:30     GBP      Services PMI

The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                                       

 10:00    EUR        Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

 15:00    USD       ISM Non-Manufacturing Index

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

Analysis and Recommendations:

The pair EUR/GBP  is currently 0.8328 after opening at 0.8342. The euro lost energy today while there was positive news from the UK.

The UK construction sector saw activity rise sharply in February, with the Markit/CIPS construction headline February activity index spiking to 54.3 from 51.4.

The data, released by Reuters, shows construction activity accelerating seeing its 14th consecutive monthly expansion. Employment in the construction sector, however, declined
despite growth in new business and output.

The 54.3 outturn was the highest since March 2011 and new business growth was the fastest in 21 months. While employment fell, which Markit reported was due to reorganizations in some companies, the decline was only marginal.

Manufacturing, came in at 51.2, down from 52.0 in January, with pace of expansion easing. The manufacturing survey also found a marked rise in pipeline inflation, with input costs seeing
the second sharpest month-on-month rise in the survey’s history.

On Friday the Office for National Statistics also published data for new construction orders, which highlighted the decline in orders in 2011.

The ONS figures showed a 2.5% quarterly fall in new orders in the fourth quarter, with a very sharp rise, of 41.6%, in infrastructure orders offset by a 26.6% fall in public housing orders.

With recession returning to the eurozone after two years of austerity, EU president Herman Van Rompuy signaled the need for a new agenda as a two-day European Union summit kicked off on Thursday.

Spanish Prime Minister Mariano Rajoy on Friday announced a new deficit to gross domestic product target for the country of 5.8% in 2012, against a prior target of 4.4%, according to media reports. Rajoy made the comments in Brussels. Spanish media has been reporting for days that the government would raise its target.

EU leaders have cleared all but the final hurdles to an unprecedented new Greek bailout as they began debating ways to turn the page on the crisis by injecting fresh life into strained economies.

German Chancellor Angela Merkel on Friday said the European Central Bank’s recent liquidity operations have bought time to solve the euro-zone debt crisis but won’t be repeated. “We will certainly not take such additional measures. The liquidity goes out of the market again,” Merkel said at the conclusion of a summit meeting of European Union leaders in Brussels, according to Reuters

Eurozone Jan producer prices rise came in better than forecast.


A very quiet Friday for Economic Data: actual v. forecast

 

 

NZD

 

 

ANZ Commodity Price Index (MoM) 

0.0%

     

1.1%

 

 

 

EUR

 

 

German Retail Sales (MoM) 

-1.6%

 

0.5%

 

0.1%

   

 

GBP

 

 

Construction PMI 

54.3

 

51.3

 

51.4

 

 

 

EUR

 

 

PPI (MoM) 

0.7%

 

0.5%

 

-0.2%

 

 

 

CAD

 

 

GDP (MoM) 

0.4%

 

0.3%

 

-0.1%

 

 

 

Sovereign Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14 

GBP/USD Fundamental Analysis March 5, 2012, Forecast

Economic Events: (GMT)

08:00     GBP       Halifax House Price Index (MoM)                           0.1%                      0.6%

The Halifax House Price Index measures the change in the price of homes and properties financed by Halifax Bank of Scotland (HBOS), one of the U.K.’s largest mortgage lenders. It is a leading indicator of health in the housing sector.

  08:15   CHF       CPI (MoM)

The Consumer Price Index (CPI) measures the change in the price of goods and services from the perspective of the consumer. It is a key way to measure changes in purchasing trends and inflation.                                                                                                             

 08:15    CHF        Retail Sales (YoY)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

09:30     GBP      Services PMI

The Services Purchasing Managers’ Index (PMI) measures the activity level of purchasing managers in the services sector. A reading above 50 indicates expansion in the sector; a reading below 50 indicates contraction. Traders watch these surveys closely as purchasing managers usually have early access to data about their company’s performance, which can be a leading indicator of overall economic performance.                                                                                                       

 10:00    EUR        Retail Sales (MoM)

Retail Sales measure the change in the total value of inflation-adjusted sales at the retail level. It is the foremost indicator of consumer spending, which accounts for the majority of overall economic activity.                                                                                                      

 15:00    USD       ISM Non-Manufacturing Index

The Institute of Supply Management (ISM) Non-Manufacturing Purchasing Managers’ Index (PMI) (also known as the ISM Services PMI ) rates the relative level of business conditions including employment, production, new orders, prices, supplier deliveries, and inventories. The data is compiled from a survey of approximately 400 purchasing managers in the non-manufacturing sector. On the index, a level above 50 indicates expansion; below indicates contraction.

Analysis and Recommendations:

The GBP/USD is currently 1.5845 down as U.S. dollar rose 0.4% against major rivals, pressuring prices of commodities that are bench-marked in the currency.

 The UK construction sector saw activity rise sharply in February, with the Markit/CIPS construction headline February activity index spiking to 54.3 from 51.4.

 The data, released by Reuters, shows construction activity accelerating seeing its 14th consecutive monthly expansion. Employment in the construction sector, however, declined despite growth in new business and output.

 The 54.3 number was the highest since March 2011 and new business growth was the fastest in 21 months. While employment fell, which Markit reported was due to reorganizations in some companies, the decline was only marginal.

 Manufacturing, came in at 51.2, down from 52.0 in January, with pace of expansion easing. The manufacturing survey also found a marked rise in pipeline inflation, with input costs seeing the second sharpest month-on-month rise in the survey’s history.

On Friday the Office for National Statistics also published data for new construction orders, which highlighted the decline in orders in 2011.

The ONS figures showed a 2.5% quarterly fall in new orders in the fourth quarter, with a very sharp rise, of 41.6%, in infrastructure orders offset by a 26.6% fall in public housing orders.

 

A very quiet Friday for Economic Data: actual v. forecast

 

 

NZD

 

 

ANZ Commodity Price Index (MoM) 

0.0%

     

1.1%

 

 

 

EUR

 

 

German Retail Sales (MoM) 

-1.6%

 

0.5%

 

0.1%

   

 

GBP

 

 

Construction PMI 

54.3

 

51.3

 

51.4

 

 

 

EUR

 

 

PPI (MoM) 

0.7%

 

0.5%

 

-0.2%

 

 

 

CAD

 

 

GDP (MoM) 

0.4%

 

0.3%

 

-0.1%

 

 

 

Sovereign Bond Auction Schedule

Mar 05  10:10  Norway  Bond auction

Mar 06  10:10  Greece  Auctions 6M T-bills

Mar 06  10:15  Austria  Bond auction

Mar 06  10.30  UK  Auctions 0.75% 2034 I/L Gilt

Mar 06  15:30  UK  Details gilt auction on Mar 15

Mar 07  10:10  Sweden  Nominal bond auction

Mar 07  10:30  Germany  Eur 4.0bn Feb 2017 Bobl

Mar 07  10.30  UK  Auctions new Sep 2017 conventional Gilt

Mar 08  16:00  US

Announces auctions of 3Y Notes on Mar 12, 10Y Notes on Mar

13 & 30Y Bonds on Mar 14

Mar 08  16:30  Italy   Details BOT auction on Mar 13

Mar 09  11:00  Belgium  OLO mini bond auction

Mar 09  16:30  Italy   Details BTP/CCTeu on Mar 14