ForexLive Asia FX news: AUD GDP beats, & Trump speech

Forex news for Asia trading Wednesday 1 March 2017

• BOJ"s Kuroda: Fiscal policy and BOJ easing can have synergy effects


• Australian GDP responses, ANZ: RBA has no reason to move on policy for near future


• Australia - Macquarie on the RBA after today"s GDP ... tipping fewer rate cuts


• MXN little changed after speech.


• US Treasury Secretary Mnuchin: Must simplify tax code, cut company taxes


• Oil - here"s a couple of items (not new) - OPEC compliance, & the shale price lid


• China labour minister: Confident on employment, but need to relocate 500,000 workers


• Australian GDP responses: "All components of domestic demand advanced"


• USD losing ground


• Here is the full text of Trump"s speech (this time fer real!)


• ANZ"s "FX Strategy Flash": Sell AUD/CHF and take profit on long AUD/USD


• More excerpts from Trump"s speech


• China"s Cabinet says Guo Shuqing to hold press conference


• China Caixin Manufacturing PMI (February): 51.7 (vs. expected 50.8)


• Bank of Japan policy board member Sato speaking


• More from Fed"s Bullard: No reason to be aggressive in rate hikes


• Links for live feed of Trump"s speech


• PBOC sets USD/CNY mid-point today at 6.8798(vs. yesterday at 6.8750)


• Trump address - excerpts of text of speech out now. preparing "historic tax reforms"


• China manufacturing PMI (official, February): 51.6 (vs. expected 51.2)


• China non-manufacturing PMI (official, February): 54.2 (vs. prior 54.6)


• More from Fed"s Bullard: Not much inflation pressure with 2% economic growth


• Goldman Sachs increased probability of Fed rate hike in March to 60% (from 30%)


• Australia - GDP for Q4: +1.1% q/q (expected +0.8% q/q)


• Japan - Nikkei Manufacturing PMI (February, final): 53.3 (preliminary 53.5, prior 52.7)


• UK data: BRC Shop Price Index for February: -1.0% y/y (expected -1.4%)


• Japan - Q4 capex data (+ company sales and profits) comes in at a big beat


• Fed"s Bullard: Fed has essentially achieved its dual mandate


• FT reports: "China Underground Lending Index surges to near two-year high"


• "Event risk" during the Asian timezone today


• Australia house price index for February +1.4% m/m (prior +0.7%)


• Preview: What to look for in Wednesday"s Bank of Canada decision


• Trade ideas thread - Wednesday 1 March 2017


• Australia - Manufacturing PMI (February): 59.3 (prior 51.2)


• Economic data due from Asia today, BOJ & Fed speakers, and trump speech


• More from Fed"s Williams: Does not see need to delay on hiking


• NZ data: Q4 Terms of Trade +5.7% q/q (expected +4.0%)


• More from Fed"s Dudley: "Good" fiscal policy to share more on stimulus burden


• Private oil inventory data shows smaller than expected build


• Fed"s Williams on the USD: Value determined by markets, a key input to outlook


• Fed hike odds jump on Dudley comments. USD/JPY setting up for a big gain


• USD/JPY liking the hawkish Fed remarks


• More from Fed"s Williams: Right now interest rates are abnormally low

The waiting was long today for the main event (I know what you"re thinking, the New Zealand terms of trade data came out first thing ... but no ...)

US President Trump spoke at 0200GMT, a major focus. There was plenty in the speech and its delivery to keep the political debaters interested, with trump hitting major points like immigration, the wall, and on repeal of Obamacare . i"ll leave that up to the politicos, but for markets the major points were:

Trump wants Congress to get on with an infrastructure program worth $1 trillion

Said he wanted to provide "massive tax relief" to the middle class

And to cut corporate tax rates

There were no specifics (for example, he didn"t mention 15% corporate tax, or any number at all) but maybe this was not the right forum for detail. Some would have been nice, though. But, there it is.

Ahead of Trump, though, there was plenty of action during the Asian timezone.

Much of it stemmed from speeches in the US afternoon/Asian morning from various Federal Reserve officials (many of these were covered in the US wrap, but here they are again, adding in those made during Asian time) to give you an idea of the barrage:

• More from Fed"s Bullard: No reason to be aggressive in rate hikes


• More from Fed"s Bullard: Not much inflation pressure with 2% economic growth
  


• Fed"s Bullard: Fed has essentially achieved its dual mandate
  


• More from Fed"s Williams: Does not see need to delay on hiking
  


• More from Fed"s Dudley: "Good" fiscal policy to share more on stimulus burden
  


• Fed"s Williams on the USD: Value determined by markets, a key input to outlook
  


• Fed hike odds jump on Dudley comments. USD/JPY setting up for a big gain


• USD/JPY liking the hawkish Fed remarks


• The Fed is on a communications offensive
  


• Fed"s Dudley: Case for rate rise is more compelling


• More from Fed"s Williams: Right now interest rates are abnormally low,


• Fed"s Williams: Rate increase up for "serious consideration" in March


• Fed"s Harker: Repeats that 3 hikes appropriate this year

The gist of the speeches/comments was to bring a March rate hike well and truly back into focus, with probabilities as high as 80% now being bandied about.

The USD gained across the board during the Asian session, but gave back some of the gains as Trump spoke. As i update though the retrace during Trump"s speech has been eroded with the USD making new session highs against the yen, EUR (marginally), while CHF and GBP are both on their lows against the USD. NZD, too, on its low against the USD.

The Australian dollar is a bit of an outperformer though. It rallied best of all during the retrace, with a taliwind coming from a big beat on Q4 GDP data today

+1.1% q/q  ...  expected +0.8% q/q, prior -0.5%  

+2.4% y/y  ...  expected +2.0% y/y, prior +1.9%, revised up from +1.8%

The big rebound is a welcome development, but optimism should be tempered. Yes, exports, residential construction, public capex and consumer spending bounced back. But an ongoing thorn is persistently low wages growth. The overall wages bill declined  0.5% for the quarter, and overall household income grew only 0.2%. You may be wondering how consumer spending managed to come back so strongly ... well much of funded by lower savings.

Another persistent drag is from falling mining capex, while weak non-mining capex remains also. These do seem to be on the improve, but its slow.

But, enough of the caveats, the data was good today on the whole and the response has been it"ll keep the RBA on hold for longer, no rate cuts on the near term horizon.

Plenty of China data (PMIs) today - see bullets above.

Regional equities:

• Nikkei +1.21%  


• Shanghai +0.38%


• HK +0.20%


• ASX -0.38%

Still to come: Preview: What to look for in Wednesday"s Bank of Canada decision

ForexLive Asia FX news: AUD GDP beats, & Trump speech
ForexLive Asia FX news: AUD GDP beats, & Trump speech
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