Wednesday to be Dominated by FOMC Statement, Forecasts, and Press Conference

March 21, 2018

Ahead of this afternoon’s FOMC event, the dollar traded lower overnight, falling 0.5% against sterling and the loonie, 0.3% versus the euro, 0.2% relative to the Swiss franc and yen and 0.1% vis-a-vis the peso, yuan and kiwi.

Investors also await the release of the U.S. fourth-quarter current account figures and latest monthly existing home sales. The Austin, Texas bomber suspect, a 24-year-old man, has reportedly died from one of his explosive devices.

Share prices remain on the defensive. While Japanese markets were closed in observance of the Vernal Equinox holiday, stocks dropped 0.6% in Hong Kong, 0.1% in Singapore and 0.3% in China. European equity markets so far have slipped 0.4% in London and 0.1% in Zurich and France.

West Texas Intermediate oil advanced 1.0% to a near 7-week high of $64.16 per barrel. Gold is 0.3% firmer.

European long-term rates have followed the rise in U.S. sovereign debt yields. The 10-year British gilt and German bund yields climbed overnight by 5 and 2 basis points.

The Board of Directors of the Central Bank of Colombia retained a 4.5% interest rate. That rate had been lowered by 3.25 percentage points from December 2016 through January 2018. While the most recent cut two months ago was accompanied by the indication from officials that the loosening rate cycle may now be over, today’s decision was not without one dissent favoring a rate cut to 4.25%. Colombian growth has been more sluggish than hoped.

Officials at the Central Bank of Chile also decided not to change the bank’s benchmark interest rate, which has been 2.5% since a 25-basis point cut last May. Chilean growth in the second half of 2017 was better than expected.

In addition to Japan, markets are closed in South Africa where Human Rights Day is being observed.

British labor market statistics showed 1) an unexpected 9,200 rise in jobless claims last month after a revised smaller drop in January than reported initially; 2) some acceleration in the growth of wage earnings, which for the three months through January still showed slower than 3.0% on-year rises; and 3) a downtick in the ILO-basis jobless rate back to 4.3% in November-January but an uptick to 2.4% in February’s claimant-basis unemployment.

The CBIs monthly index of British industrial trends dropped in March more sharply than forecast to a 5-month low of 4 from readings of 10 in February, 14 in January and 17 in both November and December.

Euro area consumer confidence in March was unchanged from February’s 3-month low.

Dutch consumer sentiment, which had ranged narrowly between a low reading of 23 and a high of 25 during the six months through February, printed at a score of 24 this month.

Swiss M3 money growth decelerated to a 3.7% 12-month advance in February after a rise of 4.0% in the year to January.

On-year Polish retail sales grew at a 2-month low of 7.9% in February.

Malaysian consumer price inflation fell nearly in half to 1.4% in March, which was the smallest 12-month rate of increase since October 2016.

In February, the Westpac-MI index of Australian leading economic indicators reversed January’s 0.3% slide.

U.S. mortgage applications fell 1.1% last week, reversing a 0.9% rise the week before.

Copyright 2018, Larry Greenberg. All rights reserved. No secondary distribution without express permission. 



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