US housing starts declined more than expected in March, while permits for future home construction slipped to a one-year low, indicating some cooling in the housing market in line with signs of a steep slowdown in economic activity in the first quarter. Housing starts plunged 8.8% from a month earlier to a seasonally adjusted annual rate of 1.089 million in March, according to the Commerce Department. At the same time, new applications for building permits, a bellwether for forthcoming construction, dropped 7.7% to 1.086 million, from a revised February rate of 1.177 million. Demand for housing has been robust over the past year, with home prices up in many markets amid a shortage of inventory. Buyers could turn to new homes, which only account for about 10% of the overall housing market, as the supply of existing homes declines.

New York Fed President William Dudley said US economic environment is "mostly favourable", but the US central bank remains cautious in hiking interest rates as threats loom. Dudley reiterated he was confident that too-low inflation would climb to a 2% target over the next few years, with "economic conditions have finally warranted the start of U.S. monetary policy normalization." The policy maker repeated his view that the Fed should take a gradual and cautious approach to monetary policy tightening amid significant uncertainties and headwinds to growth stemming from the financial crisis, which have not fully abated.

US industrial production declined more than expected in March as output dropped broadly, the latest sign that economic growth faltered in the first quarter. Industrial output fell 0.6% last month following a downwardly revised 0.6% decrease in February, according to the Federal Reserve. Industrial production slipped at an annual rate of 2.2% in the first quarter. The report joined data on retail sales, business spending, trade and wholesale inventories in indicating that economic growth slowed at the turn of the year. Growth estimates for the first quarter are as low as a 0.2% annualized rate. The world’s number one economy grew at a 1.4% rate in the fourth quarter. However, given a strong labour market, the slowdown in growth is likely to be temporary.

US consumer prices climbed modestly in March for the first time in four months, meaning little urgency for the Fed to hike interest rates in the months to come. According to the Labor Department, its Consumer Price Index inched up 0.1% last month as a recovery in gasoline prices was partially offset by a decline in the cost of food. While the measure rose the most since November, it came in against economists’ expectations for a 0.2% gain. In the 12 months through March, the CPI increased 0.9% after rising 1.0% in February. The core CPI, which excludes food and energy costs, inched up 0.1%, the smallest since August and followed a 0.3% rise in February.

Australia’s unemployment rate unexpectedly declined to the lowest level in two-and-a-half years in March, reflecting an improvement in business confidence and signalling the Reserve Bank of Australia is unlikely to ease policy in the near-term. The jobless rate dropped to 5.7% in March, according to the Australian Bureau of Statistics. A net 26,100 jobs were added to the economy in March, the biggest increase in 2016 and stronger than economists’ forecast of 18,000. The stronger labour market also further evidence that record-low interest rates are boosting a revival in industries like construction, tourism and education as a resource boom winds down.

The heads of two regional Federal Reserve banks backed an interest rate increase ahead of the Fed’s March meeting as an strengthening economy added to sentiment to tighten monetary policy. The heads of the Richmond and Kansas City Fed supported a quarter point lift in the main lending rates for banks "in light of continued improvements in labour market conditions and expectations that inflation would rise," according to minutes of the Fed’s March meeting. Recent signs that US inflation is accelerating lay the groundwork for the US central bank to hike interest rates, Richmond Fed President Jeffrey Lacker said. The Fed should proceed with its earlier plan to raise interest rates four times this year.

An interview with Ulrich Leuchtmann, Head of Currency Strategy at Commerzbank, on Swiss Franc

Fed policy makers signalled an interest-rate hike in April is unlikely, minutes of the March policy meeting showed, confirming market’s growing anticipation that the US central bank will act cautiously […]