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March 2017

US factory orders up by 1.2% month-on-month

Published: Tuesday 07 March 2017

  • US factory orders up by 1.2% month-on-month
  • Reserve Bank of Australia holds interest rate steady at 1.5%
  • German factory orders dived by 7.4%
By Mike Mistretta
US Factory orders came in a little bit better than expected at 1.2% month-on-month. This data had little effect on the Dollar as it struggled to extend its earlier gains. Investors realise they will need to wait until Friday Non-Farm Payroll to validate the optimistic Federal Reserve panel. According to Bloomberg’s Federal Reserve (FED) Fund futures the chance of a rate hike has risen to 96%. It's going to be very tough for major currencies to strengthen against the Dollar between now and the Federal Open Market Committee (FOMC) decision, with the US being the only developed nation who is actively considering raising interest rates. The debate after the FED’s decision will shift to how many more hikes the Fed signals.

It’s been argued that the Fed will want to maintain as much flexibility as possible to minimise the risk of USD disappointment. Until then, however, there may be little volatility for cable. Given we are awaiting the British parliament to trigger article 50, this month - GBP is currently trading near seven week lows.

Early this morning, we had the Reserve Bank of Australia (RBA) rate decision, no change in the cash rate at 1.5%, as unanimously expected, because of this fact we saw very little volatility although just before the announcement the Aussie Dollar was trading at the highs of the day.

Headlines from the statement from Governor Lowe accompanying the decision were that rising Australian Dollar could complicate economic transition and that Global economic conditions have improved over recent months and an unchanged policy consistent with growth and inflation targets. He mentioned headline inflation expected to pick up over the course of 2017, he finally commented that because US rates are expected to rise further there are no longer expectations of further easing in other major economies.

UK retail sales figures were down -0.4% year-on-year, weaker consumer spending is evidence of the hangover from a Brexit decision as household budgets are starting to crack under the strain of higher prices and weak wage growth.

German Factory Orders, suffered the biggest plunge since 2009 diving by -7.4%, as domestic demand fell by 10.5%. This unprecedented miss had little effect on the Euro, however, it is a reminder that German industry is having problems returning to full speed than the more recent buoyant sentiment indicators have suggested. This suggest how little the markets are taking into account the macro economic data, as the markets continue to focus on the political landscape at present.

This afternoon, the key pieces of data to look out for are Canadian and US Trade balance.  The Canadian trade balance will be scrutinized due to increasing fears of Canadian national debt. We also have the Global Dairy Trade Index so we may see some volatility for the New Zealand Dollar with dairy being the country’s biggest export. 


What can you catch but not throw?
A cold.
What jumps higher that a building?
Everything, buildings don’t jump.
How many seconds are in a year?
Only 12. January 2nd, February 2nd

Today's Major Economic Releases

EUR 10:00 EU: Revised Gross Domestic Product 0.4% 0.4%
CAD 13:30 Canada: Trade Balance 0.9b 0.2b
USD 13:30 US: Trade Balance -44.3b -47.0b
CAD 15:00 Canada: Ivey Purchasing Managers' Index -3.2% -3.2%
NZD 21:45 New Zealand: Manufacturing Sales 0.4% 0.4%

For more information, infographics and the latest currency insights, visit www.halofinancial.com/blog