Macro Roundup (Mar 4)

SHANGHAI, Mar 4 (SMM) – This is a roundup of global macroeconomic news last weekend and what is expected today.

Last weekend

The US dollar increased to 10-week-highs against the yen last Friday, as risk appetite improved amid a more upbeat outlook on some major economies and on expectations of a trade deal between China and the US.

While weaker-than-expected US economic data, especially in manufacturing, weighed on the dollar, the greenback rallied to trade higher on the day.

"Looking at the whole G10 (Group of 10 major currencies) space, there has been more follow-through from US-China trade optimism that was already in the process of getting priced in during the month of February," said Stephen Gallo, European head of FX strategy, at BMO Capital Markets in London. "Meanwhile, one of the biggest boosts to the US dollar is coming from a weak yen," he added.

Base metals ended mostly higher last Friday as LME nickel increased 0.84%, zinc gained 0.65%, aluminium rose 0.29%, while copper fell 0.6%, tin and lead edged down. SHFE nickel grew over 1%, zinc went up 0.82%, aluminum rose 0.59%, lead climbed 0.4%, while tin lost 0.28%, and copper declined slightly. 

The seasonally adjusted IHS Markit final US manufacturing purchasing managers’ Index (PMI) posted 53.0 in February, the lowest in 18 months, down from 54.9 at the start of the year, IHS Markit announced on Friday.

"The PMI indicates the US manufacturing sector is growing at its weakest rate for one and a half years, with firms reporting a marked easing in production growth in February, linked to a similar slowdown in order book growth," said Chris Williamson, chief business economist at IHS Markit. 

"Worries regarding the impact of tariffs and trade wars, alongside wider political uncertainty, undermined business confidence, with expectations of future growth running at one of the most subdued levels seen for over two years and suggesting downside risks prevail for coming months," he added. 

A private survey on China's manufacturing sector showed on Friday that factory activity shrank for a third straight month in February.

The Caixin/Markit PMI came in at 49.9 for February, compared with January's reading of 48.3, and expected 48.5. A reading below 50 signals contraction, while a reading above that level indicates expansion.

"Domestic manufacturing demand improved significantly, and foreign demand was not deteriorating as quickly as last year," wrote Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin.

Eurozone manufacturing output contracted in February for the first time in more than five-and-a-half years as a sharp fall in new work orders and an uncertain economic climate weighed on growth, IHS Markit reported on Friday.

The eurozone manufacturing PMI softened to 49.3 In February, driven by contractions for several key economies in the bloc.

Eurozone consumer price index (CPI) accelerated to 1.5% in February, up from 1.4% year on year, matched expectations. CPI core, however, slowed to 1% on a yearly basis, and missed expectations of 1.1%.

The US personal income fell for the first time in more than three years in January as dividends and interest payments dropped, pointing to moderate growth in consumer spending after it fell by the most since 2009 in December.

The Commerce Department said on Friday that personal income levels slipped 0.1% in January. That was the first decline since November 2015 and followed a 1% gain in December.

Day ahead

Economic data slated for release today include the eurozone's Sentix investor confidence for March.