Yen Tumbles Broadly as Risk Appetite Returns
Yen is sold off broadly today as risk appetite returns to the markets. European indices are all trading in black at the time of writing, while US futures also point to a rebound. Additionally, US 10-year yield is also trading higher. Swiss Franc, Dollar and Euro are trading as the weaker ones. Commodity currencies and Sterling are the stronger ones.
Technically, USD/JPY’s strong break of 109.35 resistance confirms resumption of whole rise from 102.58. Next focus is 152.52 resistance in GBP/JPY, and then 130.65 resistance in EUR/JPY. Firm break of these levels will add to the case of broad based down trend resumption in Yen.
In Europe, currently, FTSE is up 0.64%. DAX is up 0.71%. CAC is up 0.37%. Germany 10-year yield is up 0.0382 at -0.343. Earlier in Asia, Nikkei rose 1.56%. Hong Kong HSI rose 1.57%. China Shanghai SSE rose 1.63%. Singapore Strait Times rose 0.52%. Japan 10-year JGB yield dropped -0.004 to 0.081.
US person income dropped -7.1% in Feb, spending down -1.0%
US personal income dropped -7.1% in February, or USD -1517B, close to expectation of -7.2%. Spending dropped -1.0%, or USD -149B, below expectation of -0.8%.
Headline PCE price index accelerated to 1.6% yoy, up from 1.4% yoy, matched expectation of 1.6% yoy. Core PCE price index slowed to 1.4% yoy, down from 1.5% yoy, missed expectation of 1.5% yoy.
Also released, goods trade deficit widened to USD -86.7B in February, versus expectation of USD -85.5B.
Germany Ifo business climate rose to 96.6, highest since Jun 2019
Germany Ifo Business Climate rose to 96.6 in March, up from 92.7, above expectation of 93.0. That’s also the highest level since June 2019. Current Assessment index rose to 93.0, up from 90.6, above expectation of 92.4. Expectations index also rose to 100.4, up from 94.2, above expectation of 95.0.
By sector, manufacturing rose from 16.4 to 24.1, highest since November 2010. Service rose from -2.2 to 6.5. Trade rose from -14.6 to -1.4. Construction rose from -2.8 to 2.3.
Clemens Fuest, President of the ifo Institute, said: “Companies were clearly more satisfied with their current business situation. Optimism about the coming months has also returned. Despite the rising rate of infections, the German economy is entering the spring with confidence.”
UK retail sales rose 2.1% mom in Feb, down -6.3% in the past three months
UK retail sales rose 2.1% mom in February, after the steep -8.2% fall seen in the previously month. Annually, sales was down by -3.7% yoy. In the three month so February, sales dropped -6.3% 3mo3m, with strong decline in both clothing stores and other non-food stores.
USD/JPY Mid-Day Outlook
Daily Pivots: (S1) 108.87; (P) 109.05; (R1) 109.38; More..
USD/JPY’s rise from 102.58 resumes by breaking through 109.35 today, and hits as high as 109.81 so far. Intraday bias is back on long term channel resistance at 110.00. Decisive break there will carry larger bullish implications and target 111.71 resistance next. On the downside, break of 108.40 support is needed to indicate short term topping. Otherwise, outlook will remain bullish in case of retreat.
In the bigger picture, focus is now back on long term channel resistance (now at 110.00). Sustained break there will indicate that the down trend from 118.65 (Dec 2016) has completed. Further break of 112.22 resistance will confirm this bullish case and target 118.65 next. However, rejection by the channel resistance will keep medium term outlook bearish.
Economic Indicators Update
| GMT | Ccy | Events | Actual | Forecast | Previous | Revised |
|---|---|---|---|---|---|---|
| 23:50 | JPY | Tokyo CPI Core Y/Y Mar | -0.10% | -0.20% | -0.30% | |
| 07:00 | GBP | Retail Sales M/M Feb | 2.10% | 2.10% | -8.20% | |
| 07:00 | GBP | Retail Sales Y/Y Feb | -3.70% | -3.50% | -5.90% | |
| 07:00 | GBP | Retail Sales ex-Fuel M/M Feb | 2.40% | 1.90% | -8.80% | -8.70% |
| 07:00 | GBP | Retail Sales ex-Fuel Y/Y Feb | -1.10% | -1.50% | -3.80% | -3.70% |
| 09:00 | EUR | Germany IFO Business Climate Mar | 96.6 | 93 | 92.4 | |
| 09:00 | EUR | Germany IFO Current Assessment Mar | 93 | 92.4 | 90.6 | |
| 09:00 | EUR | Germany IFO Expectations Mar | 100.4 | 95 | 94.2 | |
| 12:30 | USD | Personal Income M/M Feb | -7.10% | -7.20% | 10.00% | 10.10% |
| 12:30 | USD | Personal Spending M/M Feb | -1.00% | -0.80% | 2.40% | |
| 12:30 | USD | PCE Price Index M/M Feb | 0.20% | 0.50% | 0.30% | |
| 12:30 | USD | PCE Price Index Y/Y Feb | 1.60% | 1.60% | 1.50% | 1.40% |
| 12:30 | USD | Core PCE Price Index M/M Feb | 0.10% | 0.10% | 0.30% | 0.20% |
| 12:30 | USD | Core PCE Price Index Y/Y Feb | 1.40% | 1.50% | 1.50% | |
| 12:30 | USD | Goods Trade Balance (USD) Feb P | -86.7B | -85.5B | -83.7B | |
| 12:30 | USD | Wholesale Inventories Feb P | 0.50% | 1.30% | 1.40% | |
| 14:00 | USD | Michigan Consumer Sentiment Index Mar F | 83.5 | 83 |