The dollar is a bit weaker this afternoon after Trump fired Rex Tillerson as the US Secretary of State. The move comes as no surprise; after all, Tillerson was forced to issue a formal denial that he had called his boss a “moron,” which probably made him the hero of millions of people – myself included – who have said the same thing about our bosses in private as well. (This is a major reason why I’m now self-employed.) The much-awaited US consumer price index was even less of a shocker as it was almost exactly in line with expectations.
Also in the US political scene, there’s a special election today for the House of Representatives in Pennsylvania. The election is necessary because the incumbent, virulently opposed in public to abortion, was forced to resign after his mistress revealed that he privately encouraged her to do just that when she feared she was pregnant. (The reason for the election is actually irrelevant, but I just like to mention it.)
The election is being seen as a referendum on Trump and the Republican Party in general. The district is usually a safe Republican seat, but a poll taken last Friday gave the Democratic candidate a 4 ppt lead. Nonetheless the margin of error of the poll was given as 3.7 ppt, so basically it’s a toss-up. If the Democrat does win in such a usually solid Republican district, then it’s likely that many Republican politicians will simply give up and decide to retire come elections time in November rather than go through the hassle of running again.
Overnight, on the other side of the world, the Reserve Bank of Australia’s Assistant Gov. (Financial Markets) Christopher Kent give the keynote address at the KangaNews Debt Capital Markets (DCM) Summit. It will only be a 30-minute speech so I’m not sure whether it will contain anything earth-shattering.
Japan announces its machinery orders. This is a good indicator of investment, but not that reliable from a market point of view. It’s amazingly volatile, as you can see from the graph – last July was -7.5% yoy and the next month was +4.4% yoy -- and totally impossible to predict. Economists’ forecasts are really nothing more than guesses. Nonetheless, the trend does seem to be downwards (the six-month moving average of the mom figure is negative again). I think today’s data could be negative for JPY.
Finally, we get the monthly China trifecta of retail sales, industrial production and fixed asset investment. The figures are for January and February combined, to eliminate the distortion from the Lunar New Year, which floats between the two months. The figures are compared with the year-to-date for December, which of course is the entire 2017 figure. They’re expected to show a general slowdown, but I wouldn’t put too much credence in it, because of course the figures care still somewhat distorted by the holiday.
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