Europe Open: RBNZ keeps OCR unchanged - 12 March, 2015

Market Roundup

• RBNZ leaves OCR as is at 3.5%, sidelined for extended period, 90-day BB consensus at 3.7% average in June, December, end-March GDP +3.2%, previous forecast +3.5%, CPI +0.4% end-'15, previous forecast +1.5%, will take time to return to @2%, NZD still high but pleased with current level, economists see RBNZ on hold till '16.
  
  
• Greek FinMin Varoufakis - ECB policy asphyxiating, German FinMin Schaeuble said he lost confidence in Finmin, Varoufakis says he never had it.
  
  
• Japan Q1 big mfg business sentiment index +2.4, Q4 +8.1, -0.9 consensus in Q2, previous survey +0.2, FY '14/15 CAPEX +5.1% y/y, +4.9 previous, FY '15/16 -3.9%.
  
  
• Japan Feb consumer confidence index 40.7, Jan 39.1, govt ups assessment.
  
  
• Japan Jan METI tertiary industry index rises +1.4% m/m to 100.4.
  
  
• UK Feb RICS house price balance +14, +6 consensus, January +7.
  
  
• Australia Feb employment +15.6k, unemployment 6.3%, participation 64.6%, +15k, 6.3% and 64.8% consensus, full-time employment +10.3k.
  
  
• New Zealand Feb REINZ residential house price index +0.8% m/m, +6.1% y/y.
  
  
• New Zealand Feb food prices -0.7% m/m, +1.5% y/y.

Economic Data Ahead

• (0300 ET/0700 GMT) Germany Feb CPI/HICPfinal, -0.1% and +0.1% y/y consensus; previous -0.5%, -0.4%.
  
  
• (0345 ET/0745 GMT) France Feb HICP - final, +0.6% m/m, -0.4% y/y; flash -1.1%, -0.4%.
  
  
• (0400 ET/0800 GMT) Spain Feb CPI,+0.2% m/m consensus; previous -1.6% m/m, -1.3% y/y.
  
  
• (0400 ET/0800 GMT) Spain Feb HICP, +0.1% m/m, -1.2% y/y consensus; previous -2.2% m/m, flash -1.2% y/y.
  
  
• (0430 ET/0830 GMT) Sweden Feb unemployment, 8.2% nsa, 7.8% sa consensus; previous 8.4% nsa, 7.9% sa.
  
  
• (0530 ET/0930 GMT) UK Jan trade balance,GBP9.7 bln deficit consensus; previous bln deficit.
  
  
• (0530 ET/0930 GMT) UK Jan trade bal - non-EU, GBP3.4 bln deficit consensus; previous GBP 3.8 bln deficit.
  
  
• (0600 ET/1000 GMT) Eurozone Jan industrial production, +0.2% m/m, +0.1% y/y consensus; previous unchanged, -0.2%.
  
  
• (0830 ET/1230 GMT) US Feb retail sales, +0.3% m/m consensus, +0.5% ex-autos; previous -0.8%, -0.9%.
  
  
• (0830 ET/1230 GMT) US Feb import/export prices, +0.2%, -0.2% m/m consensus; previous -2.8%, -2.0%.
  
  
• (0830 ET/1230 GMT) US weekly initial jobless claims, 305k consensus; previous 320k.
  
  
• (1000 ET/1400 GMT) US Jan business inventories, +0.1% m/m consensus; previous +0.1%.

Key Events Ahead

• N/A ECB teleconference on emergency funding for Greek banks.
  
  
• N/A OECD Gurria, Greek PM Tsipras meeting in Paris, Sweden IL-bond auction.
  
  
• (0205 ET/0605 GMT) China PBOC Gov Zhou press conference on sidelines of NPC.
  
  
• (0330 ET/0730 GMT) ECB Coeure, EU Moscovici speech at Paris conference.
  
  
• (0500 ET/0900 GMT) Buba DepPres Buch in London panel discussion on Germany.
  
  
• (0530 ET/0930 GMT) Spain E4-5 bln 1.4/5.85/1.6% 2020/22/25 Bono auctions.
  
  
• (0600 ET/1000 GMT) Buba '14 annual report release, ECB/Buba Weidmann press conference.
  
  
• (0600 ET/1000 GMT) Italy E2-2.5/2.5-3/1.25-1.75 bln 0.75/1.35/3.25% 2018/22/46 BTP auctions.
  
  
• (0600 ET/1000 GMT) Ireland E1.0 bln 2.0% 2045 IGB auction.
  
  
• (0630 ET/1030 GMT) UK DMO GBP850 mln 1.125% 2037 index-linked Gilt auction.
  
  
• (0845 ET/1245 GMT) BoE Gov Carney speech in Sheffield.
  
  
• (1300 ET/1700 GMT) German FinMin Schaeuble, Austria Schelling in Vienna panel discussion.
  
  
• (1500 ET/1900 GMT) ECB Coeure speaks with French journalists in Paris.

FX Recap

EUR/USD extended its fall and plunged to a fresh 12-year low on Thursday, underscoring the divergence in monetary policy between the euro zone and the U.S. It fell to 1.0505, the lowest since March 2003. A further fall would only trigger talks of parity with the dollar, as seen in 2002. It is currently trading at 1.0511.

USD/JPY continued its uptrend and traded at 121.64, edging closer to an eight-year peak of 122.04 hit on Tuesday. Offers move up but Japanese exporters surprisingly showing no signs of being more aggressive, given the end of fiscal year this month. Stops are seen above 122.05, 122.04.

AUD/USD is currently trading at 0.7598 lifting slightly from a modest rise in Australian employment figures but still closer to a six-year low of 0.7561 reached overnight. It was squeezed higher to 0.7624, and likely to see resistance at 0.7650.

NZD/USD bounced off the lows of 0.7161 hit yesterday and trades higher at 0.7316 levels after the RBNZ sounded less dovish than market expectation and left interest rates unchanged at 3.5 percent.

USD/CNY continued its choppy trade on Thursday. Prior to market open the PBOC set the midpoint rate at 6.1617 per dollar weaker than the previous fix at 6.1597. Spot market opened at 6.2630 per dollar and was trading at 6.2630 by midday.