Dollar Index Testing Support

* The dollar traded mostly lower on Thursday. Economic recovery optimism increased and deflationary fears subsided as worldwide manufacturing expanded more than expected. China’s manufacturing grew for a 13th straight month and US manufacturing expanded at the fastest pace since July 2004. Most major currencies pairs are trading at important technical levels ahead of Friday’s important US employment report. The S&P 500 rose 8.67 to 1,178.10. The yen fell to a 7-month low. Despite continued concerns over Greece’s financial situation, the euro rose for a fourth day out of five on stronger-than-expected European manufacturing PMI numbers. Sterling gained for a fifth straight day as the UK PMI rose to the highest level since October 1994. Despite Australia’s weaker manufacturing PMI and widening trade deficit, the Australian dollar rose on rising commodity prices. The Canadian dollar advanced as crude oil traded above $85/barrel for the first time since October 2008.
* The dollar index fell for a second day ahead of US employment data. Nonfarm payrolls were expected to rise approximately 200K. Stronger job gains may counter-intuitively depreciate the dollar as stronger growth may diminish the debt deflation problem and demand for dollar liquidity. Technically, the dollar index is at strong support and the downside is fairly limited. However, if the 79.60 support is broken, the dollar outlook will turn bearish.



Financial and Economic News and Comments

US & Canada

* The ISM US manufacturing index increased to a better-than-expected 59.6 in March from 56.5 in February, indicating US manufacturing expanded for an eighth straight month to the highest level since July 2004, according to data from the Institute for Supply Management. The index’ key components remained well above the 50 growth level in March, signaling a continued expansion in US manufacturing industries. The new orders index advanced to 61.5 from 59.5. The production index rose to 61.1 from 58.4. The employment index slipped to 55.1 from 56.1, indicating continued employment growth at a slightly slower pace in March. Inflation grew at a faster pace, with the prices paid index rising to 75.0 in March from 67.0 in February.


* US labor-market conditions are steadily improving amid continuing US economic growth. Initial jobless claims in the week ending March 27 declined 6,000 to 439,000, in line with forecast, from the previous week’s upwardly revised 445,000, figures from the Labor Department showed. The 4-week moving average decreased 6,750 to 447,250, the lowest level since September 2008. Continuing claims in the week ending March 20 declined 6,000 to 4,662,000 from the preceding week’s upwardly revised 4,668,000. The 4-week moving average of those continuing claims fell 12,500 to 4,679,500. The insured unemployment rate for the week ending March 20 was unchanged at 3.6%.
* US construction spending slipped 1.3% m/m in February, a fourth consecutive month-on-month decline, to a seasonally adjusted $846.2 billion annual rate, after a downwardly revised 1.4% m/m decrease to a $857.8 billion annual pace in January, according to data from the Commerce Department. February construction spending fell 12.8% y/y.


Europe

* The eurozone manufacturing PMI increased to 56.6 in March (vs. initially reported 56.3), a 13th straight monthly gain and the highest since November 2006, from 54.2 in February, final March PMI data from Markit Economics showed.
* Germany’s retail sales, adjusted for calendar and seasonal variations, unexpectedly slipped 0.4% m/m in February, the third decline in four months, after a downwardly revised 0.5% m/m decrease in January, according to data from the Federal Statistical Office. February retail sales fell 0.9% y/y, a tenth straight year-on-year fall, following a revised 4.0% y/y January slide.


* The German manufacturing PMI rose to 60.2 in March (vs. initially reported 59.6) from 57.2 in February, showing the sharpest manufacturing expansion since records began in April 1996, final March PMI data from Markit Economics showed.
* The UK manufacturing PMI increased to a higher-than-expected 57.2 in March from a downwardly revised 56.5 in February, indicating UK manufacturing expanded to the highest level since October 1994, according to PMI data from Markit Economics and the Chartered Institute of Purchasing and Supply.
* The SVME Swiss PMI rose to a higher-than-anticipated 65.5 in March from 57.4 in February, suggesting Switzerland’s manufacturing expanded for an eighth straight month at a faster pace, according to a survey from the Swiss Association of Purchasing and Materials Management and Credit Suisse.

Asia-Pacific

* Business sentiment among large manufacturing and service companies in Japan improved for a fourth consecutive quarter but remained negative in Q1 2010, according to the Bank of Japan’s March Tankan survey. The large manufacturers index rose as forecast to -14 in Q1 2010 from a downwardly revised -25 in Q4 2009, indicating largest manufacturers became the least pessimistic about the economy since 2008. The non-manufacturing index increased to a better-than-expected -14 in Q1 from an upwardly revised -21 in Q4, showing confidence continued to improve among large service companies. The Tankan all industries capex index, measuring capital expenditures by all Japanese industries except the financial industry, showed large manufacturers and non-manufacturers plan to cut business investment by 0.4% in the fiscal year starting today, the least in March surveys for three years.
* The Chinese manufacturing PMI increased to a seasonally adjusted 55.1 in March from 52.0 in February, PMI data from the Federation of Logistics and Purchasing showed, indicating China’s manufacturing continued its expansion at a faster pace. The output index increased to 58.4 in March from 54.3 in February; the new orders index rose to 58.1 from 53.7; and the new export-order index advanced to 54.5 from 50.3. Additionally, the HSBC/Markit Chinese manufacturing PMI also rose in March, to 57.0, from 55.8 the prior month, according to a separate report released by HSBC Holdings Plc and Markit Economics.


* The Australian Industry Group-PricewaterhouseCoopers Australian performance of manufacturing index declined to 50.2 in March from 53.8 in February, showing Australia’s manufacturing expanded above the 50 growth level for the seventh time in eight months but at a slightly slower pace.
* Australia’s trade deficit widened more than expected to A$1.92 billion ($1.76 billion) in February from a revised A$1.12 billion shortfall in January, according to figures from the Australian Bureau of Statistics.

Источник: Hans Nilsson

01.04.2010