The Australian dollar edges mildly higher after RBA left the cash rate unchanged at 2.50% as widely expected. Most importantly, the central bank reiterated that "the most prudent course is likely to be a period of stability in interest rates". Overall, the statement was like a carbon copy of the March statement and didn't offer any new information. Aussie quickly settles back into familiar range after some knee jerk reactions and would likely stay consolidative before other main events of the week.
In US, stocks were lifted by Fed chair Yellen's comments with DOW ended 134.6 pts, or 0.82% higher at 16457.66. S&P 500 rose 14.72 pts, or 0.79% to close at 1872.34. Yellen re-assured investors that the "extraordinary commitment" to keep rates near zero is "still needed and will be for some time". She emphasized that “there remains considerable slack in the economy and the labor market,” And, "the recovery still feels like a recession to many Americans, and it also looks that way in some economic statistics." Markets perceived the speech as a backpedal on the so called "six-months comment" which Yellen talked about the time frame of rate hike after ending the QE program.
In Japan, the Tankan large manufacturers index rose from 16 to 17 in Q1, missed expectation of 19. The non-manufacturing index rose from 20 to 24, also below consensus of 25. Moreover, it should be noted that the forward looking gauges posted sharp decline. The Large manufacturers outlook dropped from 14 to 8 versus expectation of 13. Non-manufacturing outlook also dropped from 17 to 13 versus expectation of 15. Economists noted that the Tankan results bear some resemblance to 1997 when Japan had that last sales tax hike. But then, the survey rebounded in the June quarter. Thus, some are optimistic that the economy will overcome the planned sales tax hike in April.
In China, the official PMI manufacturing rose to 50.3 in March versus expectation of a fall to 50.1. The HSBC manufacturing PMI was revised down to 48 in March. But markets didn't respond much to the data. It's expected that the data reaffirm the difficulties for the economy ahead, and China is well prepared to stabilize growth with a string of stimulus policies.
Looking ahead, manufacturing data will be the main focus today with Swiss SVME PMI, Eurozone PMI manufacturing, UK PMI manufacturing and US ISM manufacturing featured. Also, Germany and Eurozone will release employment data while Canada will release IPPI and RMPI.