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Japan January Core Machine Orders Plunge 5.4%


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The total value of core machine orders in Japan dropped a seasonally adjusted 5.4 percent in January, the Cabinet Office said on Wednesday - coming in at 822.3 billion yen.


That missed expectations for a decline of 1.5 percent following the downwardly revised 0.3 percent fall in December (originally -0.1 percent).


On a yearly basis, core machine orders sank 2.9 percent - again shy of expectations for a fall of 2.1 percent following the 0.9 percent gain in the previous month.


Manufacturing orders fell 1.9 percent on month and 7.5 percent on year, while non-manufacturing orders tumbled 8.0 percent on month and added 1.0 percent on year.


Government orders rose 2.7 percent on month and 6.2 percent on year, while orders from overseas plummeted 18.1 percent on month and 22.7 percent on year and orders through agencies fell 1.3 percent on month and gained 6.5 percent on year.


The total value of machinery orders received by 280 manufacturers operating in Japan tumbled 7.9 percent on month.


Also on Wednesday, the Bank of Japan said that producer prices in Japan were up 0.2 percent on month in February. That exceeded expectations for an increase of 0.1 percent following the 0.6 percent decline in January.


On a yearly basis, producer prices climbed 0.8 percent - again exceeding expectations for a gain of 0.7 percent and up from 0.6 percent in the previous month.


Export prices were up 0.6 percent on month and down 1.7 percent on year in February, the bank said, while import prices gained 1.1 percent on month and fell 0.7 percent on year.


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When is May's resignation and what is the Bank of England's opinion?





The pound continues to be the most dynamic asset of the foreign exchange market. Moreover, now traders are preparing for the growth of currency fluctuations before the next stages of Brexit. So, it is unlikely that anyone expected the British MPs to support Theresa May's deal on Tuesday. Today, few expect that the Parliament will decide to leave the European Union without a deal. The third round of voting is still on Thursday. The question of whether to extend Article 50 will be considered, and it seems very likely that there is no alternative to this solution.


It is peculiar what the MPs expect after postponing the deadline for the exit. European officials have clearly expressed their position: there will be no more concessions - neither on the Irish back-stop, nor on any other issues. Many hope that, faced with such a defeat, England will reject the idea of withdrawing from the union or hold a repeated referendum.


By the way, Theresa May even created the prerequisites for this. Here's how she commented on the disastrous vote on Tuesday:


"The European Union will want to know why we want to postpone the deadline. The House will have to answer this question: do we want to suspend the operation of Article 50, to hold a second referendum, or to conclude a deal different from the current one".


Despite May's next fiasco, ther sterling was able to stay afloat and did not sink to the bottom. After a short fall, it remained above $1.30. It seems that market participants expect to get more time, even if it has to prepare an exit without a deal.


However, the question regarding the British prime minister's ability to provide for the country's exit conditions, under which it will retain access to the single European market and customs union, is again a big question. Therefore, in the coming days, the general political uncertainty may be aggravated by the possibility, but real, resignation of Theresa May. In this regard, investors will look to selling the GBPUSD pair.


Bank of England Position


The Bank of England ordered financial companies to accumulate excess liquidity and launched a mechanism for mutual exchange of currencies to provide access to foreign currency if the need arises. A very prudent step, and precisely for this reason, members of a committee of the Bank of England made it clear that they could vote for lower rates if the country exited the EU without a deal. Thus, they intend to give the economy an opportunity to cope with the crisis.


The official position of the central bank is that the rates can not only decrease, but also rise with the rigid performance of Brexit. However, a more likely scenario, according to Mark Carney, would be a decline. He also warned that a "hard divorce" with the EU would have a strong inflationary impact due to the potential collapse of the sterling.


Artificial Intelligence Opinion
Investors are now hoping and betting quotes for the pound, a scenario of prolongation of Article 50 of the Lisbon Treaty, while they underestimate the risk of a "hard" Brexit. According to forecasts of a hedge fund created by former JPMorgan traders and using artificial intelligence, the pound is waiting for a deep fall due to an exit without a deal. According to the base scenario of traders, the sterling will first collapse and then begin to recover.


Britain will withdraw from the EU without a "default" deal, since "neither side will be able to agree on something," the fund representatives wrote.


"The longer the government postpones its decision, the more hope for the possibility of holding another referendum will increase among market players, reinforcing the view that Brexit can be canceled," the forecast also says.


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Australia House Price Index Sinks 2.4% In Q4





House prices in Australia were down 2.4 percent on quarter in the fourth quarter of 2018, the Australian Bureau of Statistics said on Tuesday - coming in at A$6.677 trillion.


That missed expectations for a fall of 2.0 percent following the 1.5 percent decline in the three months prior.


The capital city residential property price indexes fell in Sydney (-3.7 percent), Melbourne (-2.4 percent), Brisbane (-1.1 percent), Perth (-1.0 percent), Canberra (-0.2 percent) and Darwin (-0.6 percent) and rose in Hobart (+0.7 percent) and Adelaide (+0.1 percent) on a quarterly basis.


On a yearly basis, house prices sank 5.1 percent - again missing forecasts for a drop of 5.0 percent following the 1.9 percent contraction in the previous three months.


Annually, residential property prices fell in Sydney (-7.8 percent), Melbourne (-6.4 percent), Darwin (-3.5 percent), Perth (-2.5 percent) and Brisbane (-0.3 percent) and rose in Hobart (+9.6 percent), Canberra (+1.8 percent) and Adelaide (+1.5 percent).


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Euro Mixed Ahead Of German PPI





Destatis will release German producer prices for February at 3:00 am ET Wednesday.


Ahead of the data, the euro traded mixed against its major counterparts. While the euro held steady against the greenback and the yen, it rose against the pound. Against the franc, it fell.


The euro was worth 126.61 against the yen, 1.1342 against the franc, 0.8560 against the pound and 1.1347 against the greenback as of 2:55 am ET.


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Australia Jobless Rate Sinks To 4.9% In February





The unemployment rate in Australia came in at a seasonally adjusted 4.9 percent in February, the Australian Bureau of Statistics said on Thursday - beneath expectations for 5.0 percent, which would have been unchanged from the January reading.


The Australian economy added 4,600 jobs in February, shy of forecasts for the addition of 15,000 jobs following the gain of 38,300 jobs in the previous month.


The participation rate was 65.6 percent, below expectations for 65.7 - which would have been unchanged from a month prior.


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Japan Manufacturing PMI Unchanged At 48.9 In March - Nikkei





The manufacturing sector in Japan continued to contract at a steady pace, the latest survey from Nikkei revealed on Friday with a manufacturing PMI score of 48.9.


That's unchanged from the February reading and it remains beneath the boom-or-bust line of 50 that separates expansion from contraction.


Individually, there were further production cutbacks amid weaker new order inflows, while business confidence remained below the long-term average.


"Further struggles for Japanese manufacturers were apparent at the end of Q1, with latest flash PMI data showing a sustained downturn. Slack demand from domestic and international markets prompted the sharpest cutback in output volumes for almost three years," said IHS Economist Joe Hayes.


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The yen got wings, next stop $ 108.5





The fall of the yield curve below zero for the first time since 2007 stirred up the financial markets. The indicator, showing the difference between 10 and 3-year treasuries, is a reliable harbinger of a recession with a time lag of 12-18 months. Its inversion pushed players to active sales of shares. The losses of the S & P 500 amounted to 1.5%, and two new topics appeared on the market, fueling traders' interest in protective assets, such as the yen.


The sharp change in the rate of the Federal Reserve at the beginning of the year contributed to the rapid rally of US stock indices. The stock market prepared to close the quarter with the best result in nearly 30 years. However, it looks unnatural when macroeconomic statistics deteriorate and stocks rise. The growth of the US economy in the first quarter, will slowdown to less than 1% according to estimates of the leading indicator from the Atlanta Fed. hus, Morgan Stanley suspects that October-December GDP may be adjusted from 2.6% to 1.8% in quarterly terms. Divergence between economic reports and stock indicators cannot last forever.


The situation is similar throughout the world. Thus, the index of purchasing managers in the manufacturing sector of China, Japan, and the eurozone is below the critical level - 50, which indicates a slowdown in global GDP growth. Meanwhile, European stocks are ahead of their American counterparts, and the global MSCI is increasing. The naked eye can see that the market is overheated, which means it's time to pay attention to the safe haven assets. A 1.5% increase in the Japanese yen last week is a further evidence of this.


The national currency of Japan was under the "press" for quite some time. Its growth was hindered by such factors as high risk appetite, low rates of the world debt market and volatility. Inversion of the US yield curve provoked carry-traders to close positions, increased demand for funding currencies, and also caused the USDJPY rate to depreciate.


Among the most obvious fears of the market is the excessively "soft" position of the Fed. There was a too sharp change of tone. In December, the regulator allowed three series of rate increases, and now it does not plan any policy tightening. Perhaps, officials of the regulator do not agree on something, for example, a speedy recession. That is why the yield curve and went into the red zone.


Safe haven assets, as well as the yen, will be supported by the growing risks of the subsequent correction of the S & P 500 and increased volatility. The situation is heightened by rumors about Theresa May's resignation and the possible escalation of trade conflicts. Thus, the USDJPY pair may well move to the level of $ 108.5.


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New Zealand Keeps Official Cash Rate Unchanged At 1.75%





The Reserve Bank of New Zealand on Wednesday kept its Official Cash Rate at the record low of 1.75 percent for the 16th straight meeting.


The decision was in line with expectations following a 0.25 percent rate cut in November 2016.


The central bank has pared a collective 0.50 percent from its benchmark in the last 25 months, lowering the rate in six of the last 22 meetings after six straight sessions with no change.


Given the weaker global economic outlook and reduced momentum in domestic spending, the likely direction of the next OCR move is down, RBNZ Governor Adrian Orr noted.


Employment is near its maximum sustainable level, the bank said. However, core consumer price inflation remains below our 2 percent target mid-point, necessitating continued supportive monetary policy.


The global economic outlook has continued to weaken, in particular key trading partners including Australia, Europe, and China. This weaker outlook has prompted central banks to ease their expected monetary policy stances, placing upward pressure on the New Zealand dollar.


Domestic growth slowed in 2018, with softness in the housing market and weak business investment contributing.


"We expect ongoing low interest rates, and increased government spending and investment, to support economic growth over 2019. Low interest rates, and continued employment growth, should support household spending and business investment. Government spending on infrastructure, housing, and transfer payments also supports domestic demand," Orr said.


As capacity pressures build, consumer price inflation is expected to rise to around the mid-point of our target range at 2 percent.


The balance of risks to this outlook has shifted to the downside, the bank said. The risk of a more pronounced global downturn has increased and low business sentiment continues to weigh on domestic spending. On the upside, inflation could rise faster if firms pass on cost increases to prices to a greater extent.


"We will keep the OCR at an expansionary level for a considerable period to contribute to maximizing sustainable employment and maintaining low and stable inflation," Orr said.


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May will leave in exchange for support of her Brexit proposal





The British Parliament, taking control of the Brexit process, hopes to find a way out of the impasse. On Wednesday, lawmakers will explore alternatives to the prime mnister's project through a series of so-called "demonstrative" votes. The Theresa May Agreement is still a promising option. In addition, there were rumors that she would leave her position as prime minister in exchange for support of her Brexit proposal.


Voting will begin at 19:00, the results are expected by 21:00 London time. It is possible that the ministers will need more time to choose an option they prefer. In this case, the meeting will continue on Monday. Voting may not provide the result that MPs are counting on, but the fact that they have united and challenged the government is already a huge breakthrough.


Meanwhile, the pound, which won back losses against the background of traders' belief in a positive outcome of Brexit, is waiting for the results of a new vote.


Here is what leading strategists wrote:
Credit Agricole CIB
"Despite the fact that political uncertainty is likely to continue, our long-term view remains constructive - the pound will rise to $1.39 by September."
Newton Asset Management
"There is a possibility that MPs will not come to any of the final options, which will further confuse the situation."


European Council President Donald Tusk, who spoke on Wednesday at the European Parliament's plenary session in Strasbourg, said that the British should retain the right to revise Brexit plans and be given the time to do so, that is, agree to a lengthy delay. This means that the UK will participate in European elections.


Results that may follow a series of votes:
Theresa May's proposal that already failed twice will unlikely be passed. Nevertheless, some who oppose the prime minister's unpopular deal and supporters of the "hard" scenario, such as Jacob Rees-Mogg, said that they could change their mind and vote in favor. In this scenario, the likelihood of a disorderly Brexit will decrease, which contributes to the sterling's immediate strengthening against both the dollar and the euro. Although the "hard" Brexit was eliminated twice, legally it remains as the "default" scenario if no agreement is reached by April 12.


The UK remains in the customs union. This will allow the country to conduct free trade, while a single market will be closed. It may also mean that Britain will have to maintain some form of freedom of movement of citizens throughout the eurozone.


One of the versions of Theresa May's proposal is the Malthouse deal. Here, the Irish "backstop" is replaced by "technical solutions", which are currently not defined.


The idea of a second referendum remains.


The simplest option is to abolish Article 50. It is unlikely for it to receive a greater support in the House of Commons. Deputies fear that in this way they will ignore the will of the British, expressed in a referendum in 2016.


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Japan Retail Sales Add 0.2% In February





Retail sales in Japan were up a seasonally adjusted 0.2 percent on month in February, the Ministry of Economy, Trade and Industry said on Friday.


That missed expectations for an increase of 1.0 percent following the 1.8 percent decline in January.


On a yearly basis, retail sales advanced 0.4 percent - again missing expectations for 1.0 percent and down from 0.6 percent in the previous month.


Sales from large retailers tumbled an annual 1.8 percent, missing forecasts for a fall of 1.3 percent following the 3.3 percent slide a month earlier.


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