Let's have a look at the economic data for Australia, Eurozone, U.K and USA for March 2015.
Australia - Bearish (increasing)
RBA did not cut rate on Mar 3rd as speculated by the market. There was a slight drop in unemployment, down 0.1% to 6.3% for the month but the trend is still up. GDP quarter-to-quarter was 0.5% which is higher than the last quarter but less than the 0.7% forecast. Australia's major export commodity, iron ore, is still falling with no sign of even a correction. It has fallen just over 9% in March. The loss of revenue due to the price drop is far greater than any gains produced by a lower AUD, which has been going sideways in the past few weeks. Market is looking forward to Tuesday 7th April to see if the RBA will cut rate again. Overall, it is not looking good for Australia in the short to medium term.
Eurozone - Bearish
This month has produced mixed results for the Eurozone. Surprisingly, March has produced more positive economic numbers than negatives. Overall, the fundamentals for EUR is still bearish but I can see that the situation is improving compared to a few months ago.
Good numbers:
United Kingdom - Neutral
This month saw no change in the votes from Monetary Policy Committee members. It is still 9 votes for no change in interest rate. Yearly CPI is at 0% which means that the stimulus program is not delivering the desired effect*. On the good side, manufacturing and construction PMI were up. The UK general election is on May 7th and leading up to that could see weakness in the Pound as it did during the Scottish referendum last year.
* I view CPI as a measure of increase in earnings (income). I interpret CPI at 0% as a failure of the stimulus program because the money is not making its way to the consumer to encourage spending.
USA - Bullish (decreasing)
As I write his report, NFEC for April has been released but I will discuss that at the end of the month. Non Farm Payroll (now called Non Farm Employment Change or NFEC) for March was 295,000 compared to the estimate of 245,000. This is now 6 months in a row where NFP has beaten expectation. Unemployment also dropped to 5.5% this month. Final quarter GDP was 2.2% which is less than 2.4% forecast but it is the best among the world at the moment. Fed Chair Janet Yellen said “I expect that conditions may warrant an increase in the federal funds rate target sometime this year” and my (pure) speculation is that it is likely going to be September or later.
Australia - Bearish (increasing)
RBA did not cut rate on Mar 3rd as speculated by the market. There was a slight drop in unemployment, down 0.1% to 6.3% for the month but the trend is still up. GDP quarter-to-quarter was 0.5% which is higher than the last quarter but less than the 0.7% forecast. Australia's major export commodity, iron ore, is still falling with no sign of even a correction. It has fallen just over 9% in March. The loss of revenue due to the price drop is far greater than any gains produced by a lower AUD, which has been going sideways in the past few weeks. Market is looking forward to Tuesday 7th April to see if the RBA will cut rate again. Overall, it is not looking good for Australia in the short to medium term.
Eurozone - Bearish
This month has produced mixed results for the Eurozone. Surprisingly, March has produced more positive economic numbers than negatives. Overall, the fundamentals for EUR is still bearish but I can see that the situation is improving compared to a few months ago.
Good numbers:
- Spain unemployment dropped by 13,500
- French industrial production up 0.6% higher than forecast
- German Flash Manufacturing and Business climate up
- Yearly CPI estimate up 0.2% than forecast
Bad numbers:
- French manufacturing down
- Spanish and Italian Services PMI down
United Kingdom - Neutral
This month saw no change in the votes from Monetary Policy Committee members. It is still 9 votes for no change in interest rate. Yearly CPI is at 0% which means that the stimulus program is not delivering the desired effect*. On the good side, manufacturing and construction PMI were up. The UK general election is on May 7th and leading up to that could see weakness in the Pound as it did during the Scottish referendum last year.
* I view CPI as a measure of increase in earnings (income). I interpret CPI at 0% as a failure of the stimulus program because the money is not making its way to the consumer to encourage spending.
USA - Bullish (decreasing)
As I write his report, NFEC for April has been released but I will discuss that at the end of the month. Non Farm Payroll (now called Non Farm Employment Change or NFEC) for March was 295,000 compared to the estimate of 245,000. This is now 6 months in a row where NFP has beaten expectation. Unemployment also dropped to 5.5% this month. Final quarter GDP was 2.2% which is less than 2.4% forecast but it is the best among the world at the moment. Fed Chair Janet Yellen said “I expect that conditions may warrant an increase in the federal funds rate target sometime this year” and my (pure) speculation is that it is likely going to be September or later.
My views:
AUDUSD - Bearish
GBPAUD - Bullish (until UK election outcome)
EURAUD - Slightly bullish
EURUSD - Bearish
EURGBP - Neutral (until UK election outcome)
GBPUSD - Bearish (until UK election outcome)
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