Besides quite a few disappointing and declining PMI readings across the globe, the main story this morning and so far a great reason to have closed our puts yesterday seems to be a surprise cut from the ECB on their policy decision today.
The ECB's refinancing rate cut of 25 bps was expected, pushing the main refi rate to a record low of 0.50%, what was surprising was that the Marginal Lending Facility was also cut from 1.5% to 1.0%. The deposit rate at 0.00%, was left unchanged.
This sent key currencies either higher or in to a tailspin, pretty much all of the moves in FX were market positive, this sent Index futures higher.
Then the US comes along with Initial Claims which printed at its lowest since January 2008 at 324k. This is well below expectations of 345. This is the biggest beat since September 2011. Bloomberg's first sentence in their report of I.C. was, "Jobless claims are moving surprisingly lower and there's no special factors to explain away the improvement." One has to wonder what tomorrow's Employment report looks like and if the F_E_D's odd policy comments yesterday were exactly as I thought, the next logical step in removing or normalizing accommodative policy, the "unexplained" improvement in Initial Claims would seem to support the F_E_D backing away as they not too long ago set EMPLOYMENT as one of the main factors on their yardstick...VERY INTERESTING. Tomorrow could be even more INTERESTING (Wink, wink).
Then came International Trade. March exports of $184.3 billion and imports of $223.1 billion resulted in a goods and services deficit of $38.8 billion, down from $43.6 billion in February (revised) and below the expected number of $42.3 billion. This was driven not by a jump in exports oreconomic strength, which declined by $1.7 billion in February, but because of a plunge in imports of $6.5 billion, typically confirming economic weakness, mostly of consumer and capital goods as the US economy slowed substantially in March.
As for futures, I'll try to make this brief...You can probably figure out where the ECB sent the market higher and where the combination of IC that gives the F_E_D a reason to withdraw QE purchases and a worsening economy sent the market lower.
The 5 min charts are either in line or slightly negative.
Into the open the $USD is heading higher, but starting to run in to a relative negative divergence, the Euro lower, also hitting a relative, but positive divergence, the Yen is lower (the only market positive right now, and in line and the AUD is starting to head higher on a positive divergence.
To break that down, the USD price is a market negative, but looks to reverse intraday, the Euro is market negative, but looks to reverse intraday, the Yen is a market positive and looks to continue and the AUD is a market positive looking to head higher.
More on currencies coming.
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