Daily Morning Report 20.04.2015

The New Zealand dollar gave up some of its early gains on Monday after consumer prices fell more than expected, while the Aussie remained supported by a weekend reserve ratio cut by China.

NZD/USD traded at 0.7693, up 0.08% after New Zealand said first quarter consumer prices eased 0.3% quarter-on-quarter, more than the 0.2% fall seen.

AUD/USD traded at 0.7800, up 0.16%, while USD/JPY changed hands at 118.97, up 0.03%. EUR/USD traded at 1.0794, down 0.13%

At the weekend, the People’s Bank of China cut its reserve requirement by a full percentage point to 18.5% from 19.5%, the second cut in two months, adding more liquidity to the world’s second-biggest economy to help spur bank lending.

Last week, the dollar ended lower against a basket of other major currencies on Friday as investors pushed back expectations for higher U.S. interest rates after a recent run of soft economic data dampened optimism on the recovery.

The dollar shrugged off data on Friday showing that U.S. consumer prices were higher for a second successive month in March.

The Labor Department reported that the consumer price index edged up 0.2% last month, matching a similar gain in February. On a year-over-year basis, consumer prices dipped 0.1% in March after remaining flat in February.

Core consumer prices, which exclude food and energy costs increased 0.2% in March for an annual increase of 1.8%, the largest since October.

The report came after data earlier in the week showed that U.S. retail sales for March came in below expectations. Another report, showing a larger-than-forecast drop in industrial output pointed to a slowdown the first quarter.

The single currency strengthened in spite of concerns that Athens is no closer to reaching an agreement on economic reforms for bailout funds with its creditors, fuelling fears that Greece could be forced out of the euro zone.

In the week ahead, investors will be looking ahead to reports on the U.S. housing sector and data on durable goods orders for further indications on the strength of the recovery.

In the euro zone, Tuesday’s ZEW report on German economic sentiment and Thursday’s reports on private sector activity will be in focus.

On Monday, Reserve Bank of Australia Governor Glenn Stevens is to speak at an event in New York.

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