Terrorist Data And CPI Unexpectedly Cold Japanese Yen Continues To "Be Arrogant"

The financial market ushered in the baptism of the US heavy data and the attention exchange rate report.

The US's "horror data" and CPI's unexpected cold spell during the day imply that the US economy is not as strong as the soft data show, and that the Fed's interest rate hike is expected to cool down, and the US dollar will continue to rise.

In addition to heavy data, the intraday market is concerned about the US half yearly exchange rate report.

Market participants pointed out that although the president of the United States has clearly indicated that China will not be listed as a currency manipulator, it will still exert pressure on China through exchange rate and trade issues. It may retake the "exchange rate misalignment" argument, and the market needs to remain vigilant.

The US's "terrorist data" and the consumer price index (CPI) were released during the day. The US dollar continued to decline, falling against the yen and falling to its lowest level for five months.

According to figures released by the US Department of Commerce, retail sales in the US in March declined for the second consecutive month, mainly due to the decline in auto sales. In March, 6 of the 13 main retail categories declined.

The US retail sales month rate fell 0.2% in March, expected to decline by 0.2%, while the US retail sales in February decreased by 0.3%, the two month retail sales hit the biggest decline in more than 2 years.

Although family spending is expected to cool in the first quarter, steady recruitment, healthier family balance sheets and more optimistic consumers may support spending, the report points out.

The US retail sales in March declined for the 2 consecutive month, mainly due to weak demand for cars, suggesting that the economic growth slowed down in the first quarter. In addition, the data in February were also revised to -0.3%, the first time in nearly a year and the largest. The retail sales and GDP data were the most closely linked consumption expenditure, although the core retail sales rose last month, but after the four quarter of 2016, the United States increased significantly.

Support could drop sharply in the first quarter.

In addition, today's consumer price index report is also weak, especially in the CPI month rate of 0.3%, the first decline in February 2016.

Data released by the US labor department also showed that the core CPI excluding food and energy fell 0.1% from last month, the first decline since January 2010.

Ian Shepherdson, chief economist of Pantheon Macroeconomics, pointed out that the poor CPI data in March did not form a new trend. We will see a significant rebound in April.

But it is unlikely that CPI will rise in June.

Another report released follows expectations. US business inventories increased 0.3% in February from the previous month, consistent with expectations.

Us business inventories increased in February, but retail inventories in addition to cars remained unchanged for two consecutive months, indicating that inventory investment may have a negative impact on US economic growth in the first quarter of this year. We should note that in the fourth quarter of last year, inventory investment contributed 1 percentage points to GDP growth in the United States, which changed the drag caused by inventory investment to GDP over the past year.

After today's data, the US dollar index is down to 100.38 in the new year.

The yen expanded further, and the US dollar weakened against the yen, breaking its lowest level since November 15th to 108.54, down more than 50 points.

The pound and the yen also went down in short terms, setting a new low to 136.01 since last November 18th.

Zerohedge, the financial blogger, said more and more signs showed that the US economy was not as strong as the soft data showed, which triggered a new round of selling of the US dollar / yen, making the yen the highest since the US general election last year.

USD / JPY climbed to the highest level since the US general election and the biggest weekly decline since July 2016.

Some market participants pointed out that today's retail sales have declined for two consecutive months, or the economic growth in the first quarter of this year has been cold.

After today's data came out, the Atlanta fed GDPNOW model revised the US GDP growth forecast from 0.6% to 0.5% in the first quarter of this year, the lowest level since 2014.

The New York fed revised the US GDP growth forecast from 3% to 2.6% in the first quarter, and revised the US GDP growth forecast for the second quarter from 2.7% to 2.1%.

The New York Fed said the GDP growth was expected to be mainly due to an unexpected drop in retail sales figures.

Some analysts have pointed out earlier that if US inflation data cool down, it may ease.

The pressure to raise interest rates earlier is also bad for the US dollar trend.

At the beginning of this week, James Knightley, an analyst at ING, said: "if u. S. retail sales continue to be disappointing, for example, the Fed's expectation of raising interest rates three times from now on will start to cool down." James

Although the western countries are closed today because of the Jesus Friday, investors still need to pay attention to the semi annual exchange rate report released by the US Treasury Department later.

The US Treasury will publish a semi annual report on foreign exchange policy of major US trading partners later.

In view of the tough language adopted by the new US government on trade protectionism and unfair foreign exchange policy, the report should cause great concern in the market.

President Trump said on Wednesday that China would not be classified as a currency manipulator.

Trump said that one reason for this change in its campaign commitment is that China has not operated its currency in the past few months, and that the current measures may jeopardize its dialogue with Beijing in confronting the North Korean threat.

"They are not currency manipulators," Trump said.

Trump made a declaration before the US Treasury announced the semi annual trading partner exchange rate report, which undoubtedly relieved the doubts that China might soon launch a trade war. But in the huge trade deficit with China, Washington has already opened up a new front.

Some analysts pointed out that Trump announced that China would not be listed in this month's exchange rate report.

Manipulation of the country does not mean that China will sit back and relax.

Analysts say that abandoning the accusation of "currency manipulator" indicates that the United States has shown good signs to China, but trade issues remain the core issue of concern to the Trump administration. Even if it will cool down, the US government will exert pressure on China through issues such as exchange rate and trade barriers.

Louis Kuijs, Oxford Economics of Hongkong, said, "there must be some drama on major issues."

"Exchange rate is one of them, but I am sure they haven't given up yet.

Instead, they will take action in every way. "

Many analysts believe that after Trump gave up the label of currency manipulator, the currency misalignment, commonly used by the US government before 2014, is likely to be reused.

The last time the US Treasury mentioned China in its report, it was called "exchange rate misalignment" until 2014.

During the period from 2011 to 2013, as the RMB rose against the US dollar and the trade weighted effective exchange rate, the US Treasury Department repeatedly pointed out in the report that the RMB exchange rate was still unbalanced and undervalued.

Zhang Ming, director of the International Investment Office of the Institute of world economics and politics of the Academy of Social Sciences, said earlier this week that in the upcoming Treasury report, the United States is likely to regain the use of the exchange rate imbalance in the past few years.

He said that under the judgment of "exchange rate misalignment", China may need to make concessions in certain areas, such as opening up restrictions on foreign investment institutions, increasing imports to the United States and so on.

Jonas Short, an analyst at North Square Blue Oak, a research firm in Beijing, said that if Trump's popularity declined, he could easily return to a more hostile position.

During Trump's campaign, it was partly by attacking China to stir up popular support for him.

"Under the calm surface, the flow of undercurrents is hard to predict what will happen in October, given the unpredictable start of the Trump administration," Short said.

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