Australia’s Feb retail sales came at 0.0% m/m vs 0.4% expected and 0.3% last.

Key Points

The trend estimate rose 0.2% in February 2016. This follows a rise of 0.2% in January 2016 and a rise of 0.3% in December 2015.

The seasonally adjusted estimate was relatively unchanged (0.0%) in February 2016. This follows a rise of 0.3% in January 2016 and a relatively unchanged (0.0%) December 2015.

In trend terms, Australian turnover rose 3.7% in February 2016 compared with February 2015.

The following industries rose in trend terms in February 2016: Clothing, footwear and personal accessory retailing (0.7%), Household goods retailing (0.3%), Food retailing (0.1%), Cafes, restaurants and takeaway food services (0.1%) and Department stores (0.2%). Other retailing (0.0%) was relatively unchanged in trend terms in February 2016.

The following states and territories rose in trend terms in February 2016: New South Wales (0.2%), Victoria (0.2%), Queensland (0.2%), the Australian Capital Territory (1.1%), South Australia (0.3%), Tasmania (0.3%) and the Northern Territory (0.3%). Western Australia (-0.2%) fell in trend terms in February 2016.

Australia’s Feb retail sales came at 0.0% m/m vs 0.4% expected and 0.3% last.

Key Points

The trend estimate rose 0.2% in February 2016. This follows

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Kit Juckes, analyst at Societe Generale explained that if the broad dollar correction hasn’t ended yet, and the US jobs data aren’t driving the Treasury market anywhere in particular, what are we going to look at?

Key Quotes:

“The US sees March FOMC minutes and a bunch of Fed speakers. They may have a dovish bias but is it more dovish than the market now expects? Probably dovish enough not to help the dollar much. The only US data of note is the non-manufacturing ISM.

The most exciting data could come from the Chinese FX reserves release, but you’d have to guess that they will be ‘OK’. The RBA will surely be on hold, European news is very second division. But there’s always ‘Brexit’.

The fall-out from the current account data hasn’t ended and the ‘Remain’ campaign is still busy telling us that the world will end if the UK leaves the EU. A negative campaign is and for the pound and a near GBP100bn current account deficit is scary.

Since it owes much to 25 huge multinationals’ cashflow decisions and a lot to weaker oil prices, I’m loathe to overstate the importance of the data, but the more I write and talk about the quirks of the data, the more people, just tell me the UK balance of payments are horrific. I can’t see sentiment for sterling improving.”

Kit Juckes, analyst at Societe Generale explained that if the broad dollar correction hasn’t ended yet, and the US jobs data aren’t driving the Treasu

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Analysts at ANZ explained that leveraged funds reduced their net long USD positions by USD0.7bn to USD6.9bn.

Key Quotes:

“US Federal Reserve Chair Janet Yellen’s speech on 29 March, the final day of the CFTC cut-off, likely contributed to the position reduction, as it was interpreted as dovish by markets.

The USD was sold most against EUR. Overall net short EUR positions declined by USD0.6bn to USD8.1bn, but the USD selling was not broad based.

JPY and GBP saw net selling of USD0.4bn each in the week. For JPY, this marked the first time leveraged funds had sold the currency in seven weeks. They still maintain an overall JPY net long position of USD4.2bn. Ongoing Brexit concerns are not far from investors’ minds when it comes to GBP, and likely contributed to the increased net short positions to USD4.4bn.

Commodity currencies recorded their ninth consecutive week of net buying.This was despite a decline in commodity prices. Of the three commodity currencies, AUD remains the favourite among leveraged funds, with overall net long positions increasing by USD0.3bn to USD1.7bn. Though leveraged funds still maintain an overall net short position against CAD, this was reduced by USD0.4bn to USD0.6bn (see Figure 9 in PDF). NZD’s overall net long position increased by USD0.1bn to USD0.4bn.

Leveraged funds were net buyers of EM currencies for the fourth consecutive week. This time it was MXN which saw the most net buying, though it is the only currency among the three where leveraged funds still maintain an overall net short position. There was a marginal increase to RUB’s overall net long position, while BRL’s net long position was reduced slightly.”

Analysts at ANZ explained that leveraged funds reduced their net long USD positions by USD0.7bn to USD6.9bn.

Key Quotes:

“US Federal Reserve Chair J

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USD/JPY is currently offered down to the mid point of the 111 handle and into congestive territory that should offer the bulls some support against the grain.

USD/JPY was unable to hold onto whatever bid it managed to find at the end of last week’s business and on the back of a solid nonfarm payrolls report in the U.S. and a surprise positive in the ISM manufacturing in the same U.S. session.

However, the overriding issue is now not to do with jobs growth, as Yellen emphasized in her speech to the Economics Club of NY, approximately 20 times in fact through mention of the concerns around the strength of the dollar and global growth. “So trivial details like a steadily tightening US labour market and a steadily growing US economy don’t matter much,” explained Kit Juckes, economist at Societe Generale.

Also, and noted by Valeria Bednarik, chief analyst at FXStreet, the Japanese yen strengthened all through last Friday, fuelled by a sharp decline in the Nikkei 225, after the Tankan report showed that business confidence among large manufacturers declined sharply from +12 in Q4 to +6 in Q1, reaching its lowest level since Q2 2013.

USD/JPY levels

“In the 4 hours chart the technical indicators retreated from their mid-lines, and maintain strong bearish slopes, indicating the pair may fall further, particularly on a break below 111.50, the immediate support….It will take further gains beyond the 112.60 region to see take off some of the bearish pressure on the pair, and signal some further short term gains.”

USD/JPY is currently offered down to the mid point of the 111 handle and into congestive territory that should offer the bulls some support against…

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David Wagner, Global FX Strategist at Nomura, outlines this week’s headline events, with the FOMC minutes (Wednesday 19:00 GMT), RBA (Tuesday 05:30 GMT) and China FX reserves on Thursday, the main releases.

Key Quotes

“It will be relatively light on the data front for the U.S. next week, where the minutes of from the March 15-16 FOMC meeting will likely be the focus. While the FOMC did not change its interest rate targets in its last meeting, it did signal that it expects to raise rates more slowly than its previous forecast implied.”

“The minutes should give us an insight into how the various participants assessed the balance of risks at the time of the FOMC meeting and the reasoning behind the lowering path of policy expectations.”

“We will also be tracking discussions on realized inflation, inflation expectations and the outlook for inflation. On the trade balance, based on the advance report, our economists forecast that the trade balance widened to -$46.8bn in February from -$45.7bn in January.”

“In Europe, a number of ECB speakers are likely to be the focus next week alongside the ECB account of the policy meeting.”

“Continuing on the central bank front, the RBA holds its policy meeting on Tuesday. The AUD moved higher on the back of recent remarks by RBA’s Governor at the recent ASIC Annual Forum. We suspect that market participants might have been looking for a more aggressive expression of concern regarding the currency. We continue to forecast a 25bp rate cut in May; however, it seems increasingly likely that this will require a good CPI print on 27 April”

“In terms of China’s FX reserves, we believe that headline FX reserves fell by USD10bn to USD3,192bn in March, although after adjusting for FX and coupon effects, we estimate a fall of around USD62bn, from USD48bn in February”

David Wagner, Global FX Strategist at Nomura, outlines this week’s headline events, with the FOMC minutes (Wednesday 19:00 GMT), RBA (Tuesday 05:30 GM

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Kit Juckes, economist at Societe Generale offered a few words on US jobs.

Key Quotes:

“Only a few, mind. Employment growth has recovered slightly to 2% per annum. Enough to keep the US economy ticking over nicely, but wage growth’s at 2.3% and that won’t scare the Fed.

Nor will a slight uptick in unemployment as the participation rate recovers. Between excess supply as Chinese demand slows (steel), competition from robots in the labour market and everything else that’s going on, the Fed has plenty of excuses to remain on hold.”

“My colleague Michala Marcussen counted 22 instances when Janet Yellen referred to ‘global’, ‘foreign’ and ‘dollar’ in her speech to the Economics Club of NY last week so trivial details like a steadily tightening US labour market and a steadily growing US economy don’t matter much….”

Kit Juckes, economist at Societe Generale offered a few words on US jobs.

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