Data/Event Risks

CAD: Labour market data the focus, especially after the disappointing numbers seen recently.  The rate seen holding steady at 7.2%, with employment rising 15k (54.5k decline last month). The CAD held up fairly well to the stronger US dollar seen yesterday, but could play catch up with other weaker currencies if labour market data disappoints.

This morning, the leading hard disk drive makers are selling sharply lower on the session. Yesterday, famed short seller Jim Chanos said hard-disk drive companies are likely to decline. Mr. Chanos rose to fame when he predicted the downfall of Enron before the company collapsed. He has also has predicted many other noted short trades such as Hewlett-Packard Co (NYSE:HPQ), and the Chinese real estate bubble.

The Dow Jones industrial average closed above 15,000 for the first time. An improving outlook for the US economy and record corporate earnings are persuading investors to buy stocks. Moreover, Federal Reserve stimulus is also helping. The Dow has gained 15 percent this year. It has more than doubled since hitting a bottom at 6,547 on March 9, 2009 during the Great Recession.

Data/Event Risks

EUR: Focus on the German production numbers after the stronger orders data yesterday gave the euro a lift, although it was notable that the euro failed to sustain the gains later on.  Production is seen falling 0.1% in March, after 0.5% gain during February.

NZD: Labour market data is released at 23:45 GMT, with the unemployment rate seen nudging lower to 6.8%. Note that AUDNZD has been moving lower for the previous 7 weeks now, but comments overnight threaten a continuation of this trend.

GBP: The market will have half an eye on the state opening of parliament, but it’s not likely to be a market moving event. 

We all know that asset prices (stocks) are being supported by the central bank's easy money policies. Leading central banks such the Federal Reserve, Bank of England, Bank of Japan, the European Central Bank, Reserve Bank of Australia, and others have been either creating money, or lowering interest rates in order to inflate stock markets around the world. Usually, this action by the central banks will help boost the economies around the world by making money easier to borrow. It will also help to increase exports by devaluing the currency. The only problem is that every country is now doing the same thing simultaneously. 

The RBA is the latest central bank to cut interest rates following the ECB’s decision last week. The Australian central bank cut rates by 25 basis points to 2.75% - an all time low – earlier attributing the cut to the inflation rate likely to be “a little lower than expected” in the coming months. Weaker inflation pressures gave the RBA scope to cut rates, however the strong exchange rate may have also played a part. The RBA statement noted that although interest rates have already been reduced substantially the exchange rate has been “little changed” and “remains at historically high” levels for more than 18 months. This hurts exports, especially now that the country’s mining boom is considered to be close to its peak.

Gold consumption in China, the world’s largest user after India, jumped 26% in the first 3-months of 2013 from a year ago amid strong bullion sales and rising jewelry demand. Total consumption reached 320.54 metric tons in Q1. Purchases of gold bars surged 49% to 120.39 tons, while jewelry gained 16% to 178.59 tons. Gold output in China, the world’s largest producer, gained 11% in the same period to 89.91 tons.