Daily Market Report 13/03/2014

NZD 

In New Zealand yesterday the central bank increased its interest rate from 2.5% to 2.75% becoming the first major developed nation to do so, and signalled that it may remove stimulus faster than previously forecast to contain inflation. The Reserve Bank of New Zealand expects to raise the rate by about 2 percentage points over two years, with the pace depending on economic data.

EUR

The only data out from Europe yesterday was industrial production, with year on year data improving to 2.1% in comparison to a forecast of 1.9% continuing the recent trend of good data out from the Eurozone. The EUR continued to strengthen yesterday with EUR/USD climbing to a new 2 ½ year high. 

Also yesterday George Soros (famous for speculating against sterling) added his opinion on the Eurozone. He says that Europe faces 25 years of Japanese-style stagnation unless politicians pursue further integration of the currency union and change policies that have discouraged banks from lending.

Today

Further euro strength this morning with inflation in France rising to 1.1% year on year from 0.8%, easing the deflationary fears around Europe. Also Spanish retail sales figures came in much better than expected 0.5% compared to forecast fall of -0.8%.

This afternoon the focus is on US data, retail sales are meant to show an improvement from the previous month.

Mixed expectations from US employment data, with continuing jobless claims set to fall slightly, but initial jobless claims set to rise.

Key Announcements:

9.00am – EUR – ECB Monthly Report

13.30pm – USD – Initial Jobless Claims: Expected to increase to 330,000

13.30pm – USD – Retail Sales: Expected to increase to 0.2%