Daily FX Update, 16 April 2015 OVERNIGHT MARKET UPDATE:

OVERNIGHT MARKET UPDATE:

·         US industrial production declined 0.6% m/m in March. Capacity utilisation also eased to 78.4% from 79.0% in February. Much of the weakness in industrial production was driven by a 5.9% m/m decline in utilities production following the strong weather-related bounce in February. Mining output also fell 0.7% m/m amid a reduction in the number of operating oil rigs. Meanwhile, the Empire manufacturing survey was much weaker than previous reading in April, declining to -1.19 from +6.90. New orders and employment components also declined. Combined with the soft retail sales report yesterday, these data suggest that the probability of the Fed commencing its tightening cycle in June continues to diminish. 

·         Elsewhere, the NAHB housing market index rose to 56 in April from 52 on March. The details of the survey were encouraging, with current and expected sales increasing as well as homebuyer traffic.

·         The ECB’s April policy meetings showed the Governing Council remains comfortable its expanded asset purchase program will be sufficient to support a gradual recovery in euro area output and inflation. 

·         In the currency market, USD remained on the back foot as the first of the Q2 data disappointed expectations. CAD increased as the Bank of Canada suggested the effect of lower oil prices is less than feared.    

·         US Treasuries initially rallied following the disappointing US dataflow but subsequently reversed the moves.         

·         US equities advanced with the energy sector outperforming due to the sharp increase in oil prices.    

·         Crude oil markets rallied, with Brent prices closing above USD60/bbl for the first time in a month. Crude oil prices have risen around 10% in the past week and are back to levels reached in February.        

Gold prices ended higher as the dollar trended lower against a band of select currencies following some soft economic data from the US, even as uncertainty prevailed among investors over the Fed’s next move on plans to hike rates.