15 Apr 2014
AUD supported by RBA minutes, German ZEW numbers could disappoint
The Australian dollar was given some support overnight by the release of the minutes from the Reserve Bank of Australia’s April board minutes. The central bank minutes reaffirmed the bank’s neutral bias. Notable in its absence was any talk of the Aussie dollar being “uncomfortably high” as we have heard from RBA officials in recent months.
Instead the minutes only described the dollar as being high from a historical perspective – a nuance that helped to support AUD overnight. The RBA concluded with the observation that “the cash rate could remain at its current level for some time if the economy was to evolve broadly as expected.”
Chinese loan expansion
According to data released by Beijing, China’s financial institutions issued CNY1.05 trillion (USD168.8 billion) in new CNY loans in March. The new loans are a sharp increase from CNY644.5bn in February. The increase comes as China attempts to crack down heavily on the country’s shadow banking system.
Consensus expectations are that tomorrow’s Chinese GDP numbers will show a deceleration, with first quarter GDP increasing by 7.3 percent in comparison to 7.7 percent in the fourth quarter of 2013.
Some risks to ZEW numbers
At 10:00 GMT today we have the release of the ZEW Institute survey for April. Consensus expectations are for a recovery in the current situation index, after last month’s declines to 51.3. Expectations are for an increase to 51.8. However, given recent weakness in German data, particularly the slowdown in services and manufacturing PMIs, we may even see a challenge to the consensus expectation of a decline to 45.0 from 46.6.
Upside potential for US inflation numbers
In the US, the main data release is March CPI inflation numbers. Last week’s stronger PPI numbers suggest that we may see some upside on the consensus expectations of a 0.1 percent rise month-on-month with year-on-year expected at 1.5 percent after last month’s declines to 1.1 percent.
Instead the minutes only described the dollar as being high from a historical perspective – a nuance that helped to support AUD overnight. The RBA concluded with the observation that “the cash rate could remain at its current level for some time if the economy was to evolve broadly as expected.”
Chinese loan expansion
According to data released by Beijing, China’s financial institutions issued CNY1.05 trillion (USD168.8 billion) in new CNY loans in March. The new loans are a sharp increase from CNY644.5bn in February. The increase comes as China attempts to crack down heavily on the country’s shadow banking system.
Consensus expectations are that tomorrow’s Chinese GDP numbers will show a deceleration, with first quarter GDP increasing by 7.3 percent in comparison to 7.7 percent in the fourth quarter of 2013.
Some risks to ZEW numbers
At 10:00 GMT today we have the release of the ZEW Institute survey for April. Consensus expectations are for a recovery in the current situation index, after last month’s declines to 51.3. Expectations are for an increase to 51.8. However, given recent weakness in German data, particularly the slowdown in services and manufacturing PMIs, we may even see a challenge to the consensus expectation of a decline to 45.0 from 46.6.
Upside potential for US inflation numbers
In the US, the main data release is March CPI inflation numbers. Last week’s stronger PPI numbers suggest that we may see some upside on the consensus expectations of a 0.1 percent rise month-on-month with year-on-year expected at 1.5 percent after last month’s declines to 1.1 percent.