Over the weekend, the EU published a list of tariffs on US products in response to the US tariffs on steel and aluminum. The total value of EU tariffs is up to €6.4 billion and this list is for “stakeholder consultation” purposes only. The EU will make the decision on whether to impose the tariffs in three months time but this is a clear signal to the US. Stock markets are trading lower and EUR/USD is back to Friday’s lows around 1.22634.
Eurozone Consumer Price Index – Core (YoY) (Feb) was released and came as expected, unchanged in at 1%. Consumer Price Index (MoM) (Feb) was 0.2% v an expected 0.2% from -0.9% previously. Consumer Price Index (YoY) (Feb) was 1.1% v an expected 1.2%, from 1.2% previously. Consumer Price Index – Core (MoM) (Jan) was as expected at 0.4%, from -1.7% prior. Inflation rose late in 2016 and early in 2017 to 2.0%, the highest levels in five years, but has stabilized around 1.3% since June (YoY). The ECB is looking for inflation to “approach 2%”. Labor Cost (Q4) was 1.5% v an expected 1.8%, against a previous reading of 1.6%. EUR/USD moved lower to 1.23178 before turning higher to reach 1.23311 due to this data.
US Housing Starts (MoM) (Feb) came in at 1.236M v an expected 1.290M, from a previous number of 1.326M, which was revised up to 1.329M. Building Permits (MoM) (Feb) were 1.298M v an expected 1.320M, with the prior reading of 1.377M, which was revised down from 1.396M. As expected, this data showed a slight fall in residential construction activity but, overall, these data points have been recovering since hitting lows of 0.46M and 0.49M respectively in 2009, after the financial crisis. The readings last month were the highest since those lows in both cases. EUR/USD sold off from 1.23282 down to 1.23000 after this data release.
US Industrial Production (MoM) (Feb) was released and came in at 1.1%. The consensus was for 0.3%, from -0.1% previously, which was revised down to -0.3%. After four months of positive data, this measure had slipped below zero in the last reading. Capacity Utilization (Feb) was also released at this time and came in at 78.1% v an expected 77.7%, from 77.5% prior, which was revised down to 77.4%. This data point fell last month, after reaching a two year high in December. USD/JPY continued higher from 105.836 to 106.143.
US Michigan Consumer Sentiment Index (Mar) was 102.0 v an expected 99.3, from a previous number of 99.7. This measure of consumer confidence is at levels not seen since 2003 and the highest level since the financial crisis. This latest reading surpassed the previous high of 101.1, which had been reached in October. GBP/USD dropped from 1.39350 to 1.38890 in reaction to this data.
The Baker Hughes US Oil Rig Counts was released, with a headline number of 800 from 796 last week. Crude Oil WTI can become volatile around this data release and will be in traders’ minds when trading resumes on Monday.
Japanese Adjusted Merchandise Trade Balance (Feb) was released and came in at ¥-201.5B against ¥373.3B previously. Twelve months ago this data point peaked at ¥680.0B, and this was the first dip below zero since November 2015. Merchandise Trade Balance Total (Feb) was ¥3.4B v an expected ¥-99.6B, with a prior of ¥-943.4B, which was revised down to ¥-994.1B. Exports (YoY) (Feb) were 1.8% v an expected 1.9%, from 12.2% previously, which was revised up to 12.3%. Imports (YoY) (Feb) were 16.5% v an expected 17.1%, with a prior reading of 7.9%, which was revised down to 7.7. USD/JPY moved higher from 105.954 to 106.145 following this data release.
EUR/USD is down -0.20% overnight, trading around 1.22634.
USD/JPY is down -0.20% in early session trading at around 105.738.
GBP/USD is down -0.16% this morning, trading around 1.39221.
Gold is down -0.32% in early morning trading at around $1,309.61.
WTI is down -0.29% this morning, trading around $62.23.