Markets are likely to look past the European data docket to focus on the Federal Reserve speaking calendar as the QE3 debate continues to dominate price action in the aftermath of Friday’s disappointing US jobs report. Comments perceived as increasing the probability of further stimulus are likely to weigh on the US Dollar (ticker: USDollar) while those reinforcing the status quo will probably produce the opposite effect.
Dallas Fed President Fisher, Atlanta Fed President Lockhart and Minneapolis Fed President Kocherlakota are scheduled to come across the wires. Although only Lockhart is currently on the rate-setting FOMC committee, Kocherlakota and Fisher were voting members last year and ought to be intimately familiar with the arguments in favor of and against additional easing. This means their remarks may prove market-moving in the absence of other catalysts.
The economic calendar is relatively quiet in European hours, with Swiss Unemployment and German Current Account numbers amounting to the only bits of high-profile event risk. The former reading is expected to see the jobless rate drop to 3.3 percent in March, but the nominal pullback is unlikely to carry significant implications for SNB monetary policy, where the focus remains on fighting deflation, and so will probably have at best a limited impact on the Swiss Franc.
Meanwhile, the most significant take-away from the latter outcome is likely to be the export growth gauge, where expectations call for a 1.2 percent decline. Nearly 39 percent of German cross-border sales are accounted for by other Eurozone countries, so weakness here may underscore the danger of economic slowdown in the periphery for the region’s core. While this may emerge as a headwind for the Euro in due time, one data point is unlikely to stir significant fireworks from the Euro. Broadly speaking, monthly German export growth readings have been trending lower since mid-2010.
The Australian and New Zealand Dollars came under heavy selling pressure after Chinese Trade Balance figures unexpectedly showed a $5.35 billion surplus in March compared with expectations for a -$3.15 billion deficit. The result seemed to further dent PBOC stimulus expectations already on the wane after yesterday’s CPI result. The Japanese Yen rose after the Bank of Japan kept interest rates unchanged at 0.10 percent and held off on expanding its non-standard easing measures (asset purchase fund, credit-loan program, bond purchases), erasing earlier losses. The bank added that the decision was unanimous and even specified that none of its officials proposed expanding accommodative policies.
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