Risk appetite returned to the marketplace (albeit modestly) despite what was a cocktail of US economic data that continued to look anything but robust. US equities reversed early session losses and managed to squeeze up marginally on the day. This elicited a turn lower in the US dollar, which had been recently supported by the overall flight to safety of late. EUR/USD managed to creep back above 1.36 in the latter half of the session after making a low near 1.3540 earlier. There was talk of semi-official (sovereign wealth funds?) buying of the pair on the dip through the critical 1.3550 zone. We would not be surprised to see more buyers waiting in the wings all the down towards the 1.3500 mark in the near-term.
There were a couple of reports on the economic data front. The not so closely followed US small business optimism index (NFIB) dropped to 88.0 in February from 89.3 the prior month. The market had penned in a 90.0 guesstimate and was duly disappointed. The overwhelming theme was similar to what we got anecdotally from the Fed’s recent Beige Book report. Hiring intentions were unchanged but weak at -1%, the net expecting easier credit conditions fell to -14% from -13%, and the net expecting a better economy sank to -9% from 1%. The one positive was that there was no change to the +20% of net respondents looking to increase capital spending.
Additionally, we also got yet another glimpse of US consumer confidence with the release of the IBD/TIPP sentiment index. The headline here witnessed a drop to 45.4 in March from 46.8 previously. The guts of the report were no better with all three subcomponents (economic outlook, personal finances, and federal policies) dipping on the month. Overall, the data today continued to reflect some weak economic undertones in the US economy and we can’t discount these due to the poor weather.
