American FX Outlook: Housing market and the range of Fed speakers headline Tuesday

What you need to know before markets open

  • China’s GDP growth exceeded expectations in the first quarter of 2018 with the data set including retail sales beating confirming steady growth projection for China.
  • The UK labor market report came in mixed with the average weekly earnings rising 2.8%, but missing the expectations while the unemployment rate dropped to fresh 1975 low of 4.2%. For detail read my brief analysis here.
  • German investors\s sentiment deteriorated strongly in April with ZEW index falling below expectations to -8.4 in April, adding to the slump that began in March.
  • The US is scheduled to report on housing market data, but more importantly, set of Federal Reserve officials is due to speak during the day highlighted by San Francisco Federal Reserve President John Williams speaking in Madrid.

Tuesday’s market moving events

  • The US building permits are seen rising 0.7% m/m to 1.328 million in March while housing starts are seen rising 1.9% m/m to 1.269 million.
  • Canada’s manufacturing sales are expected to rise 1.1% m/m in February after falling -1.0% in January.
  • San Francisco Federal Reserve President John Williams is scheduled to speak about monetary policy at a global symposium co-hosted by the National Association for Business Economics and Bank of Spain, in Madrid at 13:15 GMT.
  • The US industrial production is expected to rise 0.3% m/m in March.
  • Federal Reserve Governor Randal Quarles is due to testify on supervision and regulation before the House Financial Services Committee, in Washington DC at 14:00 GMT.
  • Philadelphia Federal Reserve Bank President Patrick Harker to speak at Saint Joseph's University in Philadelphia at 15:00 GMT
  • Chicago Federal Reserve President Charles Evans is due to speak about current economic conditions or monetary policy at a Chicago Rotary Club Luncheon event in Chicago at 17:10 GMT.

Major market movers

  • The US Dollar fell to the lowest level since June 24, 2016, and to the lowest level in 2018 against GBP as expectations of a strong rise in the UK wages fed through to rate hike expectations.
  • With the UK average weekly earnings rising 2.8% in three months to February, nominal wages rose less than expected but still faster than inflation ending the period of negative inflation-adjusted wage growth. The wage growth miss weighed on GBP that retreated lower.
  • The Euro rose against the US Dollar above 1.2400 in tandem with Sterling but fell after the German ZEW investors’ s confidence unexpectedly strongly to -8.4 in April.

 Earlier in Asia/Europe

  • China’s GDP rose 6.8% y/y in Q1 2018 beating the market expectations.
  • China’s retail sales rose 10.1% m/m in February up from 9.7% y/y in January.
  • China’s industrial production decelerated to 6.0% y/y in February from 7.2% a month earlier.
  • Japan’s industrial production rose 0% m/m in February after revision while rising 1.6% y/y.
  • The UK average weekly earnings both excluding and including bonuses rose 2.8% in three months to February, rising at the fastest rate since September 2015 and ending the period on negative real, inflation-adjusted wage growth.
  • The UK unemployment unexpectedly dropped to 4.2% in three months to February while claimant count rose 11.6K in March after upwardly revised 15.0K in February.
  • German ZEW investors sentiment indicator unexpectedly fell to -8.2 in April from 5.4 in March as trade conflicts between the US and China and the current situation in the Syrian war weighed on the sentiment.
  • The Eurozone ZEW index of investors sentiment decelerated to 1.9 in April from 13.4 in March.

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