30 Apr 2014
Incredibly busy day ahead - Westpac
FXStreet (Bali) - Sean Callow, FX Strategist at Westpac, notes that an incredibly busy calendar awaits today.
Key Quotes
"It kicks off with Australia’s Mar private credit data (f/c 0.4% m/m) and Japan Mar IP (f/c 0.5% m/m), both of which should be overlooked ahead of the Bank of Japan decision. As always there is no fixed time for release of the decision. Each meeting this year has been in the 11:30am-12:30pm Tokyo hour but a later release seems likely this time, both due to the holiday yesterday and the fact that this meeting will produce the semi-annual Outlook for Economic Activity and Prices. The Oct release came at 1:14pm Tokyo so perhaps some time in that hour is likely, say 2-3pm Syd. However the report itself is set for 4pm Sydney/2pm Sing/HK, which could be more important than the initial statement and press conference (3:30pm Tokyo). As for the decision, Governor Kuroda has made clear that he is happy with current settings and is unlikely to hint at any change in the pace of QE. Most attention will thus be on the forecasts, with talk GDP projections will be revised down but CPI revised higher. For USD/JPY, we suspect risks overall are tilted to a round of kneejerk selling, as we saw after the 8 April announcement."
"The ECB has been anxiously awaiting the April ‘flash’ CPI reading from the moment the March data printed at just 0.5% y/y. Consensus is for a modest rebound to 0.8% y/y, with travel prices expected to bounce in April, having been distorted by the unusually late Easter. Such an outcome would only buy the ECB some breathing room at the May meeting, not change the multi-month pressure to take further easing steps. EUR should find some support on the news."
"A huge day in the US kicks off with Apr ADP private payrolls, with consensus a bullish 210k versus 191k in Mar. Soon after we see the first reading on US Q1 GDP. Westpac agrees with consensus for a sluggish 1.2% annualized growth pace, as harsh weather crimped spending relative to Q4’s 2.6% pace. As ever with GDP, there is plenty of scope for both surprise on the day and revision later. The Apr Chicago manufacturing PMI is next cab off the rank, seen remaining stronger than most others like it, at 57."
"Then of course it’s the FOMC meeting, usually a source of some volatility even when the outcome is seen as very predictable. Every indication from the Fed is that it will cut its monthly QE total by another $10bn, to $45bn, split $25bn treasuries and $20bn mortgage-backed bonds. There is no press conference so changes to the wording of the statement should be the main focus. We expect a slightly softer tone on housing but ongoing optimism over the job market. Kocherlakota is likely to dissent again from the dovish side."
Key Quotes
"It kicks off with Australia’s Mar private credit data (f/c 0.4% m/m) and Japan Mar IP (f/c 0.5% m/m), both of which should be overlooked ahead of the Bank of Japan decision. As always there is no fixed time for release of the decision. Each meeting this year has been in the 11:30am-12:30pm Tokyo hour but a later release seems likely this time, both due to the holiday yesterday and the fact that this meeting will produce the semi-annual Outlook for Economic Activity and Prices. The Oct release came at 1:14pm Tokyo so perhaps some time in that hour is likely, say 2-3pm Syd. However the report itself is set for 4pm Sydney/2pm Sing/HK, which could be more important than the initial statement and press conference (3:30pm Tokyo). As for the decision, Governor Kuroda has made clear that he is happy with current settings and is unlikely to hint at any change in the pace of QE. Most attention will thus be on the forecasts, with talk GDP projections will be revised down but CPI revised higher. For USD/JPY, we suspect risks overall are tilted to a round of kneejerk selling, as we saw after the 8 April announcement."
"The ECB has been anxiously awaiting the April ‘flash’ CPI reading from the moment the March data printed at just 0.5% y/y. Consensus is for a modest rebound to 0.8% y/y, with travel prices expected to bounce in April, having been distorted by the unusually late Easter. Such an outcome would only buy the ECB some breathing room at the May meeting, not change the multi-month pressure to take further easing steps. EUR should find some support on the news."
"A huge day in the US kicks off with Apr ADP private payrolls, with consensus a bullish 210k versus 191k in Mar. Soon after we see the first reading on US Q1 GDP. Westpac agrees with consensus for a sluggish 1.2% annualized growth pace, as harsh weather crimped spending relative to Q4’s 2.6% pace. As ever with GDP, there is plenty of scope for both surprise on the day and revision later. The Apr Chicago manufacturing PMI is next cab off the rank, seen remaining stronger than most others like it, at 57."
"Then of course it’s the FOMC meeting, usually a source of some volatility even when the outcome is seen as very predictable. Every indication from the Fed is that it will cut its monthly QE total by another $10bn, to $45bn, split $25bn treasuries and $20bn mortgage-backed bonds. There is no press conference so changes to the wording of the statement should be the main focus. We expect a slightly softer tone on housing but ongoing optimism over the job market. Kocherlakota is likely to dissent again from the dovish side."