April 30th, 2015 6:44 am | by John Jansen |

This is an excerpt from an overngight note by TDSecurities:

EURUSD continues to nudge higher and is now above 1.1150 on an extension of the EUR bull move from the past few days. While we have seen no specific trigger from hard data this morning, we think these moves continue to reflect the reassessment of monetary policy in the US, following yesterday’s dismal GDP figures and the FOMC that provided little material indication that the Fed stands ready to hike anytime soon. Against this backdrop, the dollar is giving back some of its strength from the previous months, but this is less visible against other currencies than the euro (at the time of writing, DXY is down 1.2% in two days). These moves, however, have been accompanied by a negative reaction in stock markets, starting in Asia and extending to Europe, with the latter admittedly trading on a better footing and exhibiting slightly more mixed performance so far today. In a less intuitive fashion, though, European bond markets are also suffering, which doesn’t seem to point to any clear winner amongst the various asset classes today, other than EUR and a few non-dollar FX. Commodities also generally softer on the day.


AUD Mar RBA Private sector credit threw no real surprises, up +0.5%/m, +6.2%/yr, same as prior and consistent with the historical series. Loans to buy homes was up +0.5% for owner occupiers but was up +0.9% for investors.

Q1 Terms of trade data was better than expected, -0.6% vs mkt at -1%. The better result was due to import prices falling -0.2%, not rising +1% as the market had forecast.

NZD The RBNZ removed any reference to ‘period of stability’ and ‘the next move could be up’ shifting policy from neutral to a conditional easing bias. To get a cut we need to see  (1) slowing domestic demand (2) how inflationary pressures evolve, and more specifically (3) wage and price setting outcomes being consistent with missing the 2% inflation target to the downside. For now we see today’s statement as another way of jawboning the currency. We expect the RBNZ to remain on hold at 3.5% for sometime, but expect the market to shift towards a cut in June. Further details can be accessed here <https://www.tdsresearch.com/currency-rates/viewEmailFile.action?eKey=VZST921GLCUUT83AZXCIHXMHN> .

JPY The BoJ kept policy steady, maintaining its commitment to purchase ¥80tn worth of assets per year, vote at 8-1. The dissenter backed reducing purchases to ¥45tn annually. There was no comment on the outlook for GDP or inflation, but the press conference expected to be held at 07:30GMT may cover that ground.

UK & Europe

EUR German unemployment was a bit weaker than expected as the number of unemployed fell by only -8K in April (mkt -15K), although the unemployment rate still remained unchanged at 6.4%, as expected. Eurozone inflation was also released this morning and rose from -0.1% Y/Y in March to flat Y/Y in April, in line with our forecast and consensus. This is its first time since November pushing out of negative territory.

NOK The unemployment rate for the Jan-Mar period rose from 3.9% to 4.1%, a tenth higher than expected and reaching its highest level in nearly a decade. This should help to tip the balance in favour of a rate cut at next week’s Norges Bank meeting, although we still have data early next week for registered unemployment and the Regional Network survey, both of which could also influence the Norges Bank’s decision.

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