USD Down Across The Board, Chinese Data Causes Concerns

All eyes have been on China following the release of yesterdays’ disappointing Industrial production and retail sales. Now it seems the Chinese government plan to implement tighter restrictions on the housing market have risen. We finally saw the gold price rise as a result, and the Japanese Yen moving further from its lows.

In the U.S., retail sales gained 0.1 per cent for the last month after the March drop. This number was hindered by petrol sales in the U.S., where we have seen a slowing in demand. Without the petrol decline, the figure would have had a 0.7 per cent gain which shows an increase in consumer spending, a very good indicator for economy health. It’s thought this may prompt the Fed to scale back their stimulus measures which include their monthly $85 bn bond purchasing programme.

The U.S. dollar reversed gains against the other currencies ahead of a string of U.S. data to be released this week, including industrial production numbers, housing and inflation.

Stocks
Asian stocks were mixed on the soft data releases. The Nikkei 225 increased in the session before undoing gains and ending up 0.2 per cent down. The Australian ASX/S&P 200 closed down 0.1 per cent, and the Hang Seng in Hong Kong finished 0.2 per cent down. The Shanghai Composite lost nearly 0.7 per cent .

In the U.S., stocks closed down yesterday, even with the retail sales release which surpassed expectations. Investors cashed in profits after 3 weeks of strong performance pushed up by strong earnings, jobless claims and jobs reports. The Dow Jones closed down by 0.18 per cent, S&P 500 closed even and the Nasdaq gained 0.06 per cent.

In Europe, stocks stayed lower while investors awaited the outcome of the eurozone meeting. The EURO STOXX 50 declined by 0.48 per cent, the French CAC 40 by 0.30 per cent and the German DAX 30 lost 0.44 per cent.

Forex
Slightly more currency volume in the overnight session after a quiet day yesterday. The US dollar undid some of its recent gains, ahead of a string of U.S. data to be released later this week. The EUR was up 0.2 per cent against the USD. The USD declined against the JPY in the overnight session, however its thought the Yen has some way to go in its downwards trend. The pair touched 101.27. The AUD was up against the USD too today, on profit locking by investors. The pair reached 1.0004 in the late part of Asian trading, a gain of 0.26 per cent. The dollar also fell against the British pound with a 0.15 per cent decline.

Commodities
The weakening dollar pushed investors to buy the better priced commodities like gold and silver which both gained - gold by 0.45 per cent and Silver by 0.05 per cent. Natural gas finally rallied with an 0.13 per cent increase, as colder weather is expected in some parts of the U.S. and North Europe. Crude oil rose by 0.32 per cent at time of writing.

What to watch today:
Watch out for a string of European data today which should extend gains in the EUR; also keep eyes open for ZEW economic sentiment .