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EUROPE
Politics is fracturing
in major European countries - that doesn't mean the establishment is about to
fall. Open Europe's Pawel Swidlicki analyses what the electoral gains of
Germany's AfD mean in the German political context.
Going further subzero
could widen the rift in the eurozone's fragmented financial system
UNITED STATES
Inflationary risks vs.
financial market turmoil.
5 Things to Watch at the Fed Meeting – WSJ
A post-FOMC market blastoff, but in which
direction? – Cam
Hui
Retail Sales decreased
0.1% in February – Bill McBride
Weak U.S. retail sales
highlight risks to economic outlook – Reuters
Retail Sales in U.S.
Decline After January Revised Down – BB
Disappointing retail
sales report – Pictet
OTHER
Our global scenario
remains largely intact; as we think developed markets will continue to perform
decently despite headwinds from emerging markets. As a result, our FX forecasts
see only small revisions. We have postponed the bottom in EUR/USD to next year,
in part reflecting a lack of ECB eagerness to undermine the EUR. We also
predict less GBP gains, reflecting a less hawkish BoE forecast
EM FX has continued to
improve since our latest financial forecast update and our EM10FX spot index is
now up more than 2% on the year. We stick to our forecast that the worst
weakening is behind us, that the trend in the first half of 2016 will be more
sideways and that most EM currencies will strengthen towards more fundamental
equilibrium levels from the second half of this year.
No major surprises from
annual National People’s Congress meeting. Target range of 6.5-7% adopted, we
expect growth to slow to 6.5% in 2016. Prudent fiscal and monetary stimulus
continues, more supply-side reforms. Weak activity data in January-February
biased by Lunar New Year effects. Trade data weak but also distorted, while
pace of capital outflows has eased. However, high and still rising overall debt
levels one of the key risks. Risks and complex policy dilemmas characterise
China’s bumpy transition.
As expected, no monetary
policy change in Japan today. The BoJ has likely adopted a wait-and-see
approach for now. The future decisions will be based on external risks from
particularly China. We expect continued uncertainties around the Chinese
currency to exert some downward risks to the BoJ's inflation and growth
outlook, and hence push them to cut rates again in June and H2 this year.
REGULARS
New financial forecasts;
slightly weaker sentiment; focus is turning to the Fed * Swedish CPIF seen
slightly above Riksbank’s forecast in February * Bond yields falling again * JPY
and USD in demand
It was a gloomy day in
Asia on Tuesday. The Bank of Japan kept interest rates on hold as expected but
painted a bleak picture of the outlook for the Japanese economy. Stocks headed
south in Tokyo Seoul and Hong Kong. Shares fell in Shanghai too before
rebounding. In forex markets the Australian dollar lost ground after the RBA
released dovish minutes from its March meeting. The yen edged higher after the
BoJ kept rates steady. And the yuan hit a high for the year after the PBoC
raised its daily reference rate.
Dollar and Yen Firmer
The greatest trick the
Devil ever pulled was convincing the world he didn't exist
Egypt has devalued its
pound amid a shortage of US dollars the Russian rouble rose on news that Putin
would pull Russian forces out of Syria and the USD looks ready to rip higher as
the rate differential diverges from the dollar index.
New ORB poll puts Leave
ahead as CBI members back EU membership * EU-Turkey migrant deal in trouble
ahead of European leaders’ summit * Putin orders Russian forces to pull out of
Syria * US General says Brexit could threaten NATO alliance * Majority of
German businesses unsatisfied with Government’s migration policies * French
government waters down labour reform bill following widespread protests
German power shift —
Washington-Warsaw split — Farmers parade
Bear Market Rally Fizzles:
Global Stocks Down On BOJ Disappointment; Oil Slides For 2nd Day
The JPY defaults to the
strong side as risk appetite slides and the BoJ passed on new policy moves. The
focus now swings to tomorrow’s FOMC meeting where the market may be
underestimating the potential for a hawkish Fed.
Last night's Bank of
Japan meeting was something of a non-event with no interest rate or policy
shifts and only a cautious downgrade in terms of outlook. Stateside however
today's FOMC meeting could be a different story as improving data attract
policy hawks.
FINLAND & FINNISH
Irlannin
ihme * Japanin rahapolitiikka pysyi ennallaan * Euroalueen teollisuustuotanto
kasvoi alkuvuonna vahvasti – Suomi jäi porukan hännille * Tervetuloa Nordea
Economic Outlook –webinaariin