U.S. Consumer Sentiment Shows Relatively Modest Drop Amid Coronavirus Fears

Trading 13 mar 2020 Commentaire »

In light of the rampant fear over the coronavirus outbreak and the subsequent sell-off on Wall Street, preliminary data released by the University of Michigan on Friday showed a relatively modest deterioration in U.S. consumer sentiment in the month of March.

The report showed the consumer sentiment index slid to 95.9 in March after rising to 101.0 in February, although the index still came in above economist estimates for a reading of 95.0.

"Importantly, the initial response to the pandemic has not generated the type of economic panic among consumers that was present in the runup to the Great Recession," said Surveys of Consumers chief economist Richard Curtin.

He added, "Nonetheless, the data suggest that additional declines in confidence are still likely to occur as the spread of the virus continues to accelerate."

The pullback by the headline index primarily reflected a notable decrease by the index of consumer expectations, which tumbled to 85.3 in March from 92.1 in February.

The current economic conditions index showed a more modest drop, slipping to 112.5 in March from 114.8 in February.

"Perhaps the most important factor limiting consumers' initial reactions is that the pandemic is widely regarded as a temporary event," Curtin said.

"The component of the Sentiment Index that posted the greatest loss involved judgements about prospects for the economy during the year ahead," he added. "In sharp contrast, consumers more favorably judged the economic outlook over the next five years than last month."

Curtin noted the most effective efforts to contain the outbreak, including widespread closures and self-isolation, will also have the largest negative impact on the economy and significantly increase the probability a subsequent recession will last longer than the virus.

On the inflation front, one-year inflation expectations edged down to 2.3 percent in March from 2.4 percent in February, while five-year inflation expectations were unchanged at 2.3 percent.


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U.S. Import Prices Drop Less Than Expected In February

Trading 13 mar 2020 Commentaire »

Primarily reflecting a steep drop in fuel prices, the Labor Department released a report on Friday showing a decrease in U.S. import prices in the month of February.

The Labor Department said import prices fell by 0.5 percent in February after inching up by a revised 0.1 percent in January.

Economists had expected import prices to slump by 0.8 percent compared to the unchanged reading originally reported for the previous month.

The drop in import prices came as prices for fuel imports plummeted by 7.7 percent in February after falling by 0.6 percent in January, with petroleum prices leading the way lower.

Excluding fuel prices, import prices rose by 0.3 percent in February after edging up by 0.2 percent in the previous month.

Higher prices for non-fuel industrial supplies and materials, foods, feeds, and beverages, and capital goods all contributed to the February advance.

The report also showed a substantial decrease in export prices, which tumbled by 1.1 percent in February after climbing by a revised 0.6 percent in January.

Export prices had been expected to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.

The unexpected nosedive in export prices was partly due to a sharp pullback in prices for agricultural exports, which plunged by 2.7 percent in February after jumping by 2.1 percent in January.

The Labor Department said falling prices for vegetables, soybeans, and meat in February more than offset higher fruit prices.

Prices for non-agricultural exports also slumped by 1.0 percent in February after climbing by 0.6 percent in January, with the decrease reflecting lower prices for non-agricultural industrial supplies and materials.

Compared to the same month a year ago, import prices in February were down by 1.2 percent, while export prices were down by 1.3 percent.


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Dollar Climbs On Hopes Of U.S. Stimulus Package

Trading 13 mar 2020 Commentaire »

The U.S. dollar strengthened against its major counterparts in the European session on Friday, as expectations of U.S. stimulus package helped soothe fears about the economic fallout from the coronavirus crisis.

House Speaker Nancy Pelos indicated that U.S. lawmakers and the White House could agree on a stimulus package today.

China cut its reserve requirement ratio for the second time this year, releasing 550 billion yuan in liquidity.

European stocks recovered from their huge sell-off on Thursday. Stimulus from the European Central Bank and a U.S. travel ban to prevent the outbreak's spread failed to calm market fears.

Data from the Labor Department showed a decrease in U.S. import prices in the month of February.

The Labor Department said import prices fell by 0.5 percent in February after inching up by a revised 0.1 percent in January.

The greenback appreciated to 1.2456 against the pound, its biggest since October 11. The greenback is seen finding resistance around the 1.22 mark.

The greenback edged higher to 1.1103 against the euro, from a low of 1.1221 seen at 12:45 am ET. Next key resistance for the greenback is likely seen around the 1.10 level.

Final data from Destatis showed that Germany's consumer prices increased a steady pace in February.

Consumer price inflation remained unchanged at 1.7 percent in February. This was in line with the estimate published on February 28.

Extending early rally, the greenback moved up to an 8-day high of 107.50 against the yen. The greenback is likely to face resistance around the 109.00 region, if it gains again.

The Bank of Japan said it will provide ample liquidity and ensure stability in the financial markets amid high volatility triggered by coronavirus outbreak fears.

Taking into account the rapid fall in liquidity in the bond market, the BoJ conducted unscheduled outright purchase of Japanese government bonds, or JGBs, on Friday. The bank said it will conduct additional outright purchases as needed.

The greenback was up at 0.9555 against the franc, an 8-day high. Should the greenback strengthens further, it is likely to test resistance around the 0.97 region.

The greenback was trading on a positive note versus the kiwi, at 0.6147. Further rally may test resistance around the 0.60 area.

In contrast, the greenback fell against the loonie and was trading at 1.3865. Immediate support is seen near the 1.37 level.

The greenback held steady against the aussie, after having recovered from a low of 0.6325 seen in the previous session. The pair had finished yesterday's deals at 0.6235.

The University of Michigan's consumer sentiment index for March is due at 10:00 am ET.


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*U.S. Consumer Sentiment Index Drops To 95.9 In March

Trading 13 mar 2020 Commentaire »

U.S. Consumer Sentiment Index Drops To 95.9 In March


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U.S. Import Prices Drop 0.5% In February

Trading 13 mar 2020 Commentaire »

Primarily reflecting a steep drop in fuel prices, the Labor Department released a report on Friday showing a decrease in U.S. import prices in the month of February.

The Labor Department said import prices fell by 0.5 percent in February after inching up by a revised 0.1 percent in January.

Economists had expected import prices to slump by 0.8 percent compared to the unchanged reading originally reported for the previous month.

The report also showed a substantial decrease in export prices, which tumbled by 1.1 percent in February after climbing by a revised 0.6 percent in January.

Export prices had been expected to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.


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Dollar Little Changed After U.S. Export & Import Prices

Trading 13 mar 2020 Commentaire »

U.S. export and import prices for February have been released at 8:30 am ET Friday. After the data, the greenback changed little against its major rivals.

The greenback was trading at 1.2495 against the pound, 107.22 against the yen, 0.9510 against the franc and 1.1154 against the euro around 8:34 am ET.


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*U.S. Import Prices Drop 0.5% In February, Export Prices Plunge 1.1%

Trading 13 mar 2020 Commentaire »

U.S. Import Prices Drop 0.5% In February, Export Prices Plunge 1.1%


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ECB Ready To Do More To Ensure Smooth Monetary Policy Transmission, Says Lane

Trading 13 mar 2020 Commentaire »

The European Central Bank will not tolerate any risks to the smooth transmission of monetary policy in all jurisdictions of the euro area, Executive Board member Philip Lane said in a blog post on Friday.

"We clearly stand ready to do more and adjust all of our instruments, if needed to ensure that the elevated spreads that we see in response to the acceleration of the spreading of the coronavirus do not undermine transmission," Lane worte.

The ECB had left its key rates unchanged but unveiled fresh stimulus on Thursday. After the decision, President Christine Lagarde said it was not the role of the ECB to close spreads between sovereign bonds.

After Lagarde's comment, Italian government bonds saw sharp sell offs on Thursday and lifted the spread between 10-year German bunds and Italian bonds.

Economists expect Italy to enter recession due to the mounting damage caused by the spread of coronavirus.

Supporting ECB's decision to hold rates, Lane said a move in the short-term rate is typically most powerful if it is expected to be persistent. This persistence channel is less relevant in the context of the spreading of the coronavirus, he said.

"While this major shock is hitting us at high speed, our baseline scenario is that it will be ultimately temporary in duration," he said.


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Dollar Steady Ahead Of U.S. Export & Import Prices

Trading 13 mar 2020 Commentaire »

U.S. export and import prices for February are due at 8:30 am ET Friday. Ahead of the data, the greenback held steady against its major rivals.

The greenback was worth 1.2499 against the pound, 107.01 against the yen, 0.9499 against the franc and 1.1160 against the euro as of 8:25 am ET.


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Pound Little Changed After BOE Minutes

Trading 13 mar 2020 Commentaire »

The Bank of England has released minutes from the March meeting at 8:00 am ET Friday. After the release, the pound changed little against its major rivals.

The pound was trading at 1.2514 against the greenback, 133.78 against the yen, 1.1862 against the franc and 0.8919 against the euro around 8:04 am ET.


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