Daily Market Review: US February Retail Sales Rose

Interest Rate Decision (CH, 09:30 GMT)

ECB Monthly Report (EU, 10:00 GMT)

Employment Change (QoQ) (EU, 11:00 GMT)

Core PPI (MoM) + Current Account + Initial Jobless Claims + PPI (MoM) (U.S, 13:30 GMT)

Sales at U.S. retailers climbed twice as much as forecast in February; showing improving job prospects are helping consumers and the economy overcome higher taxes and gasoline prices. Purchases jumped 1.1 percent, exceeding all projections in a Bloomberg survey of economists and the biggest gain in five months, according to Commerce Department figures issued yesterday in Washington. Another report showed companies boosted inventories in January to gear up for the pickup in demand.

Haruhiko Kuroda was endorsed by the lower house of parliament to become Bank of Japan (8301) governor, clearing the first hurdle in Prime Minister Shinzo Abe’s plan to install a central bank leadership in favor of more easing. Lawmakers in the chamber, which is dominated by the ruling coalition, today also approved Kikuo Iwata and Hiroshi Nakaso for two deputy governor posts. Elsewhere, Australia’s interest-rate reduction cycle may have ended as traders bet the biggest gain in payrolls in almost 13 years will prompt the central bank to hold off further cuts, sending the currency to a one-month high.

Bloomberg News reported that Europe may contract 1 percent to 1.5 percent in the next 12 months with the private sector unable to borrow and austerity policies limiting growth, according to Pacific Investment Management Co.’s Mohamed El-Erian. “The private sector is still starved for credit,” El- Erian, the chief executive officer of the world’s largest manager of bond funds, said in a “Bloomberg Surveillance” radio interview with Tom Keene. “Given the austerity in place, the economy will contract, which is bad for unemployment, especially youth unemployment.”

EUR/USD: The EUR/USD traded at a three month low after a report showed U.S. retail sales in February increased the most in five month, bolstering the outlook for the world’s largest economy. Today, the pair was trading in the narrow range of 38pips at the time of writing as investors are locking profits on the USD ahead of economic data and news in the Euro area. Events likely to affect the trend of the pair on the European session are the Spanish Retail Sales (YoY), which is expected to come at -11.2% compared to -10.7% recorded previously and the Eurozone will release its ECB Monthly report and Employment Change (QoQ), which is forecast to come at -0.1% compared to -0.2% registered last quarter. Later in the day, the U.S will release the Core PPI (MoM) (Forecast: Unchanged at 0.2%), the Current Account (Forecast: -112.8B – Previous: -107.5B), the Initial Jobless Claims (Forecast: 350K – Previous: 340K) and the PPI (MoM) (Forecast: 0.7% - Previous: 0.2%). Better than expected data in the U.S will be bullish for the USD and the pair may fall to test the support level of 1.28760. On the other hand, worse than expected data in the U.S will be bearish for the USD and the pair may increase to test the resistance level is at 1.30279.

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USD/CHF: The USD/CHF was trading at 0.95280 (nearly seven-month high) after sales at U.S. retailers climbed twice as much as forecast in February, bolstering the outlook for the world’s largest economy. Market sentiment seems bullish on the pair ahead of the key risk event for the CHF, the Interest Rate Decision. Traders will watch interest rate changes closely as short term interest rates are the primary factor in currency valuation. The Interest rate is expected to remain unchanged at 0.00%. Later in the day, the U.S will release the Core PPI (MoM) (Forecast: Unchanged at 0.2%), the Current Account (Forecast: -112.8B – Previous: -107.5B), the Initial Jobless Claims (Forecast: 350K – Previous: 340K) and the PPI (MoM) (Forecast: 0.7% - Previous: 0.2%). Investors should be prudent and adopt a wait and see strategy on the pair. The resistance level is at 0.95502 and the resistance level is at 0.95042.
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Gold: The yellow metal traded lower as U.S. data showing a strengthening economy boosted equities and damped demand for haven assets and assets in gold-backed exchange-traded products dropped to 2,470.877 metric tons, the lowest since September, according to data tracked by Bloomberg. The commodity was trading flat at 1587.766 ahead of the Core PPI (MoM) (Forecast: Unchanged at 0.2%), the Current Account (Forecast: -112.8B – Previous: -107.5B), the Initial Jobless Claims (Forecast: 350K – Previous: 340K) and the PPI (MoM) (Forecast: 0.7% - Previous: 0.2%) in the U.S. Investors should also monitor the trend of USD for visibility as gold and the USD often trade inversely to one another. Other events likely to affect the trend of the commodity are data from the Euro area and China. Investors should remain prudent and wait for data to come on market before taking position on gold. The resistance level is at 1599.303 and the support level is at 1574.917.