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The Day Ahead
Asian shares struggled to find their footing on Tuesday as markets returned from the four day Easter holiday break. Yesterday’s downbeat U.S. economic data led to a cautious start to the trading week and the mood was not helped by mixed Japanese economic data released by before the market opened. Japanese household spending rose 1.2% in February from a year earlier in price-adjusted real terms, in contrast with the median forecast for a 1.5% fall, partly because of the extra Leap Year day. But the country's jobless rate inched up to 3.3%, and retail sales fell short of expectations coming in at 0.5%.The Nikkei skidded 0.5% as the Japanese fiscal year draws to a close at the end of this month. Australian shares shed 1.4% in their first day of trade following the long weekend as banking sector stocks came under pressure.
It was a slow start to the week in FX space with many pairs seemingly happy stay within tight ranges. Speculation of more monetary stimulus and talk that Japanese Prime Minister Shinzo Abe might delay an unpopular sales tax hike and call a snap election kept the yen under pressure, though Abe insisted on Tuesday that neither option was planned.
Gold dipped slightly managing to hold above a one-month low while oil extended overnight losses on both sides of the pond with Brent down 0.7%t at $40.01 a barrel, while U.S. crude fell 0.6 percent to $39.16 as concerns mount that a rally since January is fizzling out, while analysts forecast another rise to record levels for U.S. crude stockpiles.
So to the day ahead and the main focus will be on Federal Reserve Chair Janet Yellen's speech at 1720 GMT. U.S. data released on Monday showed signs of weakness, with consumer spending barely rising last month and inflation retreating. That suggested the Federal Reserve could remain cautious about raising interest rates this year even as the labour market rapidly tightens. The market will be looking for fresh signals on the outlook for U.S and interest rate hikes, particularly after a recent chorus of hawkish comments from other Fed officials.
US CB Consumer confidence at 15:00 BST will also be one to watch with a slight improvement expected (93.2) from last month’s surprisingly poor data (92.2). The short-term outlook grew more pessimistic, with consumers expressing greater apprehension about business conditions, their personal financial situation, and to a lesser degree, labour market prospects. Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions still suggests the economy will continue to expand at a moderate pace in the near-term.
Asian shares struggled to find their footing on Tuesday as markets returned from the four day Easter holiday break. Yesterday’s downbeat U.S. economic data led to a cautious start to the trading week and the mood was not helped by mixed Japanese economic data released by before the market opened. Japanese household spending rose 1.2% in February from a year earlier in price-adjusted real terms, in contrast with the median forecast for a 1.5% fall, partly because of the extra Leap Year day. But the country's jobless rate inched up to 3.3%, and retail sales fell short of expectations coming in at 0.5%.The Nikkei skidded 0.5% as the Japanese fiscal year draws to a close at the end of this month. Australian shares shed 1.4% in their first day of trade following the long weekend as banking sector stocks came under pressure.
It was a slow start to the week in FX space with many pairs seemingly happy stay within tight ranges. Speculation of more monetary stimulus and talk that Japanese Prime Minister Shinzo Abe might delay an unpopular sales tax hike and call a snap election kept the yen under pressure, though Abe insisted on Tuesday that neither option was planned.
Gold dipped slightly managing to hold above a one-month low while oil extended overnight losses on both sides of the pond with Brent down 0.7%t at $40.01 a barrel, while U.S. crude fell 0.6 percent to $39.16 as concerns mount that a rally since January is fizzling out, while analysts forecast another rise to record levels for U.S. crude stockpiles.
So to the day ahead and the main focus will be on Federal Reserve Chair Janet Yellen's speech at 1720 GMT. U.S. data released on Monday showed signs of weakness, with consumer spending barely rising last month and inflation retreating. That suggested the Federal Reserve could remain cautious about raising interest rates this year even as the labour market rapidly tightens. The market will be looking for fresh signals on the outlook for U.S and interest rate hikes, particularly after a recent chorus of hawkish comments from other Fed officials.
US CB Consumer confidence at 15:00 BST will also be one to watch with a slight improvement expected (93.2) from last month’s surprisingly poor data (92.2). The short-term outlook grew more pessimistic, with consumers expressing greater apprehension about business conditions, their personal financial situation, and to a lesser degree, labour market prospects. Continued turmoil in the financial markets may be rattling consumers, but their assessment of current conditions still suggests the economy will continue to expand at a moderate pace in the near-term.