Daily Forex Fundamental Overview
Fundamental Analysis
EUR
"We have shown in the past that we can be very creative within our mandate. When people ask: "Are you ready for a new shock?", I always answer: trust us, we always find the means within the scope of our mandate".
- Peter Praet, ECB
German import prices fell at the fastest pace in more than six years in April on slipping energy prices. Import prices decreased 6.6% on year-on-year basis in April after falling 5.9% in March, while number of economists anticipated a 6.2% decline for April. The 6.6% year –on-year fall in April was the biggest drop since October 2009, when prices slid 8.1% and have been falling since January 2013. Excluding crude and mineral oil products, import prices decreased 4% from same period of last year, and import prices of energy plunged 30.8%. On a monthly basis, the picture of import prices was also worse than expected as prices slid by 0.1% confounding expectations for a 0.3% rise and March's 0.7% gain. Moreover, at the same time, export prices fell 2% annually in April, following a 1.6% decrease in March, and on month-on-month basis, the export price index fell 0.1%.
In addition, a separate report showed that French household consumption expenditure on goods was virtually stable in April 2016. The continent's second largest economy saw its consumers increase their volume of spending by 0.2% last time. Another rise, this time of 0.1% is on the cards. Moreover, expenditures on energy as well as on durables slowed down sharply, while consumption of food products dropped markedly.
CAD
"A weak start to the year for energy prices meant a wider current account deficit for Canada in the first quarter. The deficit moved to $16.8 billion, slightly more than $1 billion wider than a modestly revised Q4 result".
- Canadian Imperial Bank of Commerce
According to Canada's Statistics Bureau, the country's current-account deficit widened during the first three months of the current year to 16.77 billion Canadian dollars or $12.86 billion. The following release was largely in line with the market consensus for a $16.8 billion deficit, according to economists from Royal Bank of Canada. Meanwhile, the previous quarter's deficit was revised higher to $15.71 billion. Foreign investment in Canadian bonds was the largest contributor to the net inflow of funds in the economy. The deficit on international trade in goods expanded to $1.3 billion to $6.3 billion in the first quarter. The deficit on international transactions in goods, in turn, deepened to $6.34-billion from $5.04-billion. Overall, exports of goods plunged by $1.49-billion to $130.36-billion as soft crude prices cut the value of energy exports. The overall deficit on international trade in services narrowed by $171-million (US) to $5.65-billion (Canadian) as Americans increased their spending in Canada.
In the meantime, the Raw Materials Price Index (RMPI) slipped to 0.7%, led by higher prices for crude energy products. The IPPI declined 0.5% in April, after falling 0.6% in March. The motorized and recreational vehicles commodity group (-2.1%) was the main reason for the drop in the IPPI in the previous month.
JPY
"Mr. Abe is set to reboot his pro-growth strategies after the disappointing results of three years of Abenomics, a policy mix made mainly of monetary easing and government spending".
- Takashi Nakamichi, Market Watch
Japan's unemployment rate remained unchanged at 3.2%, in line with economists' expectations, after having reached 3.1%, the lowest level in 11 years back in October 2015, data by the Ministry of Internal Affairs and Communications showed. Unemployment has declined steadily since reaching the all-time high of 5.6% in July 2009. Separate data from the Ministry of Health, Labour and Welfare shows that there were 134 jobs for every 100 people seeking work in April, a jump from the previous month's 130 and the best showing since November 1991. That suggests the level of job availability is still high, which analysts think could keep the unemployment rate low or push it lower over coming months. Still, an improved labour market has yet to translate into the wage growth needed to stimulate consumption or inflation.
Moreover, industrial production in April rose 0.3% from the previous month, coming in well above expectations for a 1.5% contraction in the wake of disruptions caused by an earthquake. In addition, other data also beat expectations — household spending in April rose 0.2% from the previous month, compared with forecasts from for a 0.6% drop. On a year-on-year basis, household spending fell 0.4%, but that still beat a forecast for a 1.4% drop. Despite a handful of April readings on Japan's economy came in better than expected, but analysts do not think that will deter Prime Minister Shinzo Abe's apparent drive to delay a planned sales tax hike.
AUD
"The trend in new home sales reiterates that the peak for the cycle has passed, but the descent we're now observing is very mild ".
- Diwa Hopkins, HIA Economist
Australian building approvals increased for a third consecutive month
during the April, thus spurring doubts on the relatively common opinion
that residential construction will slow in the future years. According
to the Australian Bureau of Statistics, approvals advanced 3% to 20,243
after seasonal adjustments, and were better than market expectations of a
plunge of 3%. This figure was 0.7% higher than levels of a year
earlier, as well as was the highest monthly total since October 2015.
The strength of the release was mainly affected by private sector
excluding houses — namely apartments — which soared 8.1% reaching
10,548, thus reimbursing a decrease in private sector housing approvals
which plunged 1.9% slipping to 9,695. Overall, the following data shows
there were more apartments than freestanding houses approved in April.
Following situation had never been seen before.
Another data, which was also revealed by the Australian Bureau of Statistics, showed that Australia's current account deficit narrowed to a seasonally adjusted -$20.79 billion in the first quarter from the fourth quarter of last year. Economists, in turn, had expected a current account deficit of $19.5 billion in the quarter. Meanwhile, the fourth quarter deficit was upwardly revised to $22.63 billion from the $21.11 billion initially reported.
