Aussie's recovery lost steam and weakens after after release of a bunch of Chinese data. The closely watched China GDP growth slowed to 7% yoy in 1Q15, the slowest pace since 4Q09 and down from 7.3% in the prior quarter. Whilst this came in line with expectations, the government would have to accelerate monetary easing so as to achieve its 7% full year growth target. Other economic data also pointed to moderation in growth momentum. Retail sales expanded 10.2% yoy in March of the year, below expectations of 10.8% and prior month's 10.7%. Industrial production slowed sharply to 5.6% yoy in March, from January and February's combined 6.8% gain. Growth in fixed asset investment decelerated to 13.5% yoy in the first 3 months of the year March, compared with 13.9% in January and February's combined, as pressured by the slumped in housing market and overcapacity in related sectors. Released earlier this week, the trade report was disappointing. Meanwhile, expansion in money supply came in weaker than expected in March. M2 growth moderated to 11.6% yoy in March from 12.5% in February.
In US, Minneapolis Fed Narayana Kocherlakota said he's "much more worried about the downside" of inflation staying persistently under the 2% target. He warned that "we've see in Europe and Japan, that when inflation gets stuck at low levels, it's very hard to get it back up." And he noted that "raising the Fed funds rate in 2015 would be inappropriate, because such an action would serve to further delay the return of inflation to target."
Looking ahead, ECB press conference is a focus today. It's been a month since the ECB has kicked off its QE program of EUR 60b per month (announced in January). President Mario Draghi, in the upcoming meeting, would likely evaluate the program, noting that the QE has made a good start but the impact on the economy remained to be seen. He would also reiterate the Governing Council's commitment to its inflation mandate and generally maintain a dovish tone. Economic developments have improvement of late, the Conference Board leading economic index rose to 104.7 in February from a revised 104 in the previous month, whilst the economic sentiment indicator jumped to 103.9, its highest value since mid-2011, in March from an upwardly revised 102.3 a month ago. Whilst Greece's political uncertainty remains a drag, recent stabilization in energy prices has helped stabilize inflation.
The latest ECB Bank Lending Survey was encouraging with loan demand strengthening across all categories over the past 3 months and expectations more bullish over the coming 3 months. A net 39% of banks reported they expect demand for loans from businesses would rise over the next 3 months, up from 17% previously; a net 29% reported to expect that the demand for loans for mortgages would rise over the next 3 months, up from 19% previously and a net 32% reported to expect that the demand for loans for consumer credit would rise over the next 3 months, up from 22% previously.
Another focus is BoC rate decision. The central bank is expected to leave policy unchanged at 0.75% in April. Policymakers would probably revise lower their growth and inflation forecasts in light of soft economic data released during the inter-meeting period. The unemployment rate steadied at 6.8% in March with the number of payrolls rising 28.7K. The employment report continued to suggest that growth in Canada's job market paused. The number of full-time job fell -28.2K while part-time employment rose 56.8K. The decline in the full-time employment rate would likely pressure average-hours worked and wage growth in the first half of the year. Headline inflation stayed at 1% yoy in February. CPI rose 0.2% m/m in February after contracting -0.2% in January. Meanwhile, the central bank's core inflation estimate eased to 2.1% in February, down from 2.2% in January. Policymakers would remain cautious in monitoring core inflation and wage growth.
On the data front, German CPI final, Eurozone trade balance will be released in European session. Empire state manufacturing index, industrial production, NAHB housing market index and Fed's Beige Book report will be released from US.