EUROZONE DATA: Soft Data Key To Near-term ECB Outlook; April Flash PMIs In Focus
Soft data will be key in charting the Eurozone’s economic trajectory in the coming months, with hard data significantly lagging volatile US tariff developments. That puts focus on this afternoon’s flash EC consumer confidence reading, tomorrow’s April flash PMIs and Thursday’s April German IFO survey.
- Last Thursday’s post decision Reuters sources piece noted that “some ECB policymakers see a high chance of a further interest rate cut in June” (in line with current market pricing), while others who are thus far undecided “want to see how soft indicators of economic activity and other variables such as energy prices pan out before making any predictions about their next meeting”.
- Within the PMIs, the new export orders component will be closely watched. Goldman Sachs have written that “statistical analysis implies that a 1pt pullback in new export orders predicts a hit to year-over-year export growth in most countries (3⁄4pp on average), suggesting that a survey pullback will subsequently show up in actual export data”.
- Analysts expect the Eurozone-wide composite PMI (due 0900BST/1000CET tomorrow) at 50.2 in April, which would fully unwind March’s 0.7pp bounce to 50.9. Services is seen at 50.5 (vs 51.0 prior) and manufacturing at 47.4 (vs 48.6 prior).
- Similar dynamics are expected in the French (due 0815BST) and German (0830BST) readings.
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CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
- CANADA PM CARNEY TO MEET GOVERNOR GENERAL AT NOON
- CARNEY EXPECTED TO SEEK ELECTION
US TSYS: Available "Extraordinary Measures" Pick Up Slightly From Lows
Treasury has $163B of "extraordinary measures" remaining for authorities to use to fend off hitting the debt limit as of March 19, per the latest release of Treasury data. That's up from $86B on Mar 17 and a low of $34B on Feb 24.
- That's a little under half of the $377B in measures available to Treasury, with most of the amount remaining ($143B) coming from the so-called "G Fund".
- This headroom is in addition to $416B in cash left in the TGA, at last count.
- We haven't seen any changes recently to "x-dates" by when Treasury will run out of cash until the debt limit is lifted.
- Consensus still centers around late July/early August, but much will depend on April's major mid-month tax take. Treasury wrote to Congress last week that they would be able to provide an update on the x-date in the first half of May, after the conclusion of tax season.
USDCAD TECHS: Short-Term Outlook Remains Bullish
- RES 4: 1.4793 High Feb 3 and key resistance
- RES 3: 1.4700 Round number resistance
- RES 2: 1.4641 76.4% retracement of the Feb 3 - 14 bear leg
- RES 1: 1.4452/4543 High Mar 13 / 4 and a bull trigger
- PRICE: 1.4345 @ 16:27 GMT Mar 21
- SUP 1: 1.4242 Low Mar 6 and a key near-term support
- SUP 2: 1.4151/4107 Low Feb 14 / 50.0% of Sep 25 - Feb 3 bull run
- SUP 3: 1.4011 Low Dec 5 ‘24
- SUP 4: 1.3944 61.8% retracement of the Sep 25 ‘24 - Feb 3 bull cycle
USDCAD is trading closer to its recent lows. The bull cycle that started Feb 14 remains intact and moving average studies remain in a bull-mode position, highlighting a dominant uptrend. Note that the latest pullback has exposed a near-term key support at 1.4242, the Mar 6 low. Clearance of this level would undermine the bull theme and instead highlight potential for a test of 1.4151, the Feb 14 low and a bear trigger. The bull trigger is 1.4543, the Mar 4 high.
