• USD: Lower, Yellen appointed to the Fed, retail sales post unexpected rise, consumer sentiment dips
  • JPY: Lower, BOJ may double QE, threat of intervention
  • EUR: Higher, Greek debt fears fade, talk of German/French Greek rescue package, industrial output surged
  • GBP: Higher, house prices jump, Conservatives expand lead in the polls
  • CAD and AUD: AUD mixed & CAD higher, Canada's employment growth beats expectations

Overview

The USD traded at a three week low Friday pressured by announcement that President Obama will nominate Janet Yellen as vice chair of the Federal Reserve. Yellen is a policy dove and her appointment will likely mean that the Fed will keep interest rates low for much of 2010. USD was also pressured by improving risk appetite as global equity markets rally. The EUR traded higher supported by diminishing concern about the Greek debt crisis and in reaction to report that Germany and France may be considering a $55bln rescue plan for Greece. GBP traded higher supported by report of a jump in UK house prices. Commodity currencies traded higher supported by stronger equity markets and improving risk sentiment with CAD supported by report of stronger than expected Canadian employment and BOC rate hike speculation. AUD gains were limited by speculation the RBA will pause in April. JPY traded lower pressured by report that the BOJ may double the size of its quantitative ease to ¥20trln and in reaction to increasing threat of BOJ intervention. US economic data was mixed with retail sales reported stronger than expected, Michigan consumer confidence posted a slight drop. Business inventories were unchanged. USD came off its lows as US equities turned lower after the release of today’s data. Focus turns to next weeks Fed policy meeting on March 16th. No Fed policy change is expected. Investors will be looking to see whether the Fed makes any changes in its policy statement in regard to the language of “extended period” for low rates.


Today’s US data:

February retail sales rose 0.3%, a reading of -0.2% was expected. Ex. autos retail sales rose 0.8%. March Michigan sentiment came in at 72.5, a reading of 73.6 was expected. January business inventories were unchanged with sales up 0.6%.


Upcoming US data:

Next week's US economic calendar includes the March 15th release of March Empire State Manufacturing expected at 22 compared to 24.9 last month along with February industrial production, capacity use and March NAHB index. Industrial production is expected to rise by 0.1% compared to 0.9% last month. Capacity use is expected unchanged at 72.6. The NAHB Index is expected unchanged at 17. On March 16th February housing starts and building permits will be released along with February import prices. Housing starts are expected at 580k compared to 591k last month and building permits are expected at 610k compared to 621k last month. Import prices are expected flat. On March 17th February PPI will be released expected at -0.2% compared to 1.4% last month. On March 18th February CPI will be released expected at 0.1% compared to 0.2% last month. Q4 current account, initial jobless claims for week ending 03/13, leading indicators for February and March Philly Fed will also be released on March 18th. The current account is expected at -120bln compared to -108bln last quarter. Initial claims are expected at 457k compared to 462k last week. Leading indicators are expected to rise by 0.2% compared to 0.3% last month. Philly Fed is expected at 18 compared to 17.6 last month.