New Zealand Trade Balance
The New Zealand Trade Balance figures for March expected at a surplus came in better, the results are as follows:
Trade Balance – Survey:250M Actual:324M Prior:489M
Imports – Survey:3.34B Actual:3.72 Prior:2.97
Exports – Survey:3.55B Actual:4.04 Prior:3.46
Trade Balance (Full Year) – Survey:-4983 Actual:-4796 Prior:-5161
The Kiwi moved to session highs against the USD on the release.
Euro News
The following are headlines coming out of the Europe during the Asian session:
- The UK’s largest banks may have to hold more capital than the sector average under a plan that Chancellor Darling is expected to disclose in the coming month. The added capital would be used as insurance against a future financial crisis.
- Authorities in Italy have seized ~300M USD in assets from Deutsche Bank, JP Morgan, Delpa and UBS in relation to the institutions handling of the $2.2B municipal bond issuance and swaps related to older retired debt.
- France’s Finance Minister stated earlier that he sees the bottom of the recession in the World and that deflation risks may have passed.
- He added that he sees the USD remaining the reserve currency in the near future.
Aussie Continues Lower on Swine Flu & Further Rate Cuts
The continued reports about the spread of the Swine Influenza globally, with cases being reported in Europe, North America and Asia, the risk averse currencies have gained a significant bid early in Asian trading. The hardest hit on the session which seems to have more weight on it than others is the Aussie, with the NAB (National Australia Bank) suggesting the RBA can cut rates to 2% by year end is the Aussie. The AUD/USD pair moved toward the 23.6% retracement where it has found some support above the 70 cent mark and could retrace some of its earlier losses.
Japan’s Retail Sales
Japan’s Retail Sales where released generally worse than expected, the reading were as follows:
Large Retailers’ Sales – Survey:-7.8% Actual:-8.1% Prior:-8.2%
Retail Trade YoY – Survey:-4.7% Actual:-3.9% Prior:-5.8%
Retail Trade MoM - Survey:-0.4% Actual:-1.1% Prior:-0.3%
The Yen and USD have had the bid through most of the Asian session, as more speculation about the scope of the swine flu spreads through the markets.
Morning. Dallas Mfg Activity Index at 10:30 AM
The only US news this morning is the Dallas Manufacturing index for April. This is another of the regional indices that measures the strength of the manufacturing sector. The low reached in the region was -61 in November. Since that time, the index has improved with 3 of the last 4 months showing improvement. This month the expectation is for another improvement to -46 from -49.0 last month. The index has been negative since June 2007 but this would be the highest level since September 2008. There is no Canada data out this AM.
Overnight, the British Bankers Association Loans for House Purchases for March came out at 26,097 down from 28,024. This was the first decline since November but as the chart shows, activity is still at depressed levels.
Worries about the Swine Flu extended to the US with Pres Obama declaring a public health emergency. There have been 20 reported cases in the US with more expected. USDMXN soared as over 100 people have died and the country, especially Mexico City, virtually locked down over the weekend – with church services in the largely Catholic country canceled. There are 20 million people in the Mexico City and the city is considered the epicenter of the outbreak.
I am sure there will be plenty of speculation concerning the spreading of the flu. Stocks are down on the back of expectation of slower growth if the flu escalates to a pandemic porportions.
Oil is down this morning. Supply is a concern this week with a full slate of Treasury auctions.
White House’s Summer on the Wires
The White House’ NEC Director Summers had the following comments:
- I expect economy will continue to decline.
- Sharp declines in employment for quite some time this year.
- Administration is on track toward expansion; says even sharp plans take time to work.
- Reiterates administration’s view that vast majority of US banks are well capitalized.
- Its in everyone’s interest for Chrysler negotiations to succeed ahead of Apr. 30 deadline.
USD/MXN Pops on the Open
The USD/MXN pair appreciated 2% on the open of the trading week on swine flu implications. We saw the pair penetrate the 38.2% retracement and pull back somewhat.
Bank Stress details released on the newswires
- BANKS’ ESTIMATES NOT NECESSARILY CONSISTENT WITH REGULATORS
- BANKS TO BE TOLD TO HOLD BUFFER FOR LOSSES THROUGH 2011
- SAYS CAPITAL BUFFER NEEDED ISN’T MEASURE OF SOLVENCY
- TESTS REFLECT $900 BILLION OF OFF-BALANCE-SHEET ASSETS
- BANKS SHOULDN’T BE SURPRISED AT THE RESULTS
- SUPERVISORS TO ENSURE BANKS MAINTAIN ADEQUATE BUFFER OVER TIME
- MOST BANKS HAVE MORE CAPITAL THAN NEEDED
- STRESS TESTS SET CAPITAL BUFFER FOR DEEPER LOSSES
- ACCOUNTED FOR LOAN-LOSS PROVISIONS ALREADY ON BANKS’ BOOKS
- EXPECTS BANKS WILL DRAW DOWN BUFFERS
- UNEMPLOYMENT RATE USED WAS NOT AS STRESSFUL AS ORIGINALLY THOUGHT IN FEBRUARY
- 22% WAS USED FOR HOUSING PRICE DECLINE WORST CASE SCENARIO
- NO CAPITAL BUFFER STATED IN THE RELEASE
The stock market is fairly unchanged.
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