There is some really big data out tonight in terms of UK GDP and German CPI which should be market movers in FX land – we’ll look at how the Euro and Pound stack up in the lead up later in this morning’s note but first it was a scatological night in the US stock market overnight even though the data was fairly solid with pending homes sales up 3.4% from a fall of 0.5% last while the Dallas Fed index rose to 11.7 from 4.9. In the end US stocks closed in the black which has driven the June SPI 200 200 contract up 21 points to 5554 bid this morning.
The chart of the Dow during the US day replicates my favourite roller coaster as the Dow traded through a 187 point range with M&A activity helping out the solid economic data to rescue form weakness. In the end the Dow closed up 87 points at 16,448 for a gain to 0.54%, the Nasdaq fell 2 points or 0.04% to 4,074 while the S&P gained 6 points or 0.3% to 1,869. Of note in share specific news is that bank of America fell 6.3% after cancelling a buyback.
European stocks benefited from the M&A activity in the pharmaceutical industry again, which drove the market. AstraZeneca was up 14% on the Pfizer continued interest in a takeover. In the end the FTSE was 0.21% higher at 6,700, the DAX rose 0.47% to 9,446 while the CAC rose 0.39% to 4,461. In Europe it is worth noting that the Bundesbank said it saw no chance of deflation overnight but German import prices fell 0.6% in March to an accelerated 3.3% rate.
In Asia yesterday it was a bad day after the weaker end to Wall Street the previous week with the Nikkei off 0.98% to 14,288 even though the retail sales data for march released yesterday rose solidly, up 16.1% in March to an 11% year on year pace. In Shanghai stocks fell 1.65% as the repo rate leapt to 4% after the weekend meeting of senior Chinese leaders which reinforced there is no big stimulus measures in the pipeline. Today is Showa day in Japan and there is no data out in the region so it should be fairly quiet.
On currency markets the US dollar regained some ground after coming under pressure in Early European trade. This saw the Euro head up to 1.3880 before settling back to 1.3850. No doubt Bundesbank comments helped the early gains but how long can they fight the data? A bit of Euro weakness would certainly help the deflation scenario.
The German CPI is huge for Euro tonight particularly where the Euro sits in this almost 1 year uptrend which began in May last year. The bottom of the trend is the pnk line you can see which was such solid support twice this year.
The key level to watch – for both support or a break – is 1.3750.
Elsewhere the pound is largely unmoved at 1.3805 while USDJPY is grinding higher to 102.62 while the Aussie dollar came under pressure testing support at 0.9241 after a big rise in early Europe to 0.9316 which is a signs the bears are in control for the moment having chased back the bulls from 0.9316(this is an edit of an error this morning).
Sterling is at multi-year highs and a solid GDP, or not will either reinforce the top or lead to a very important break – level to watch 1.6967 topside and 1.6670 for support.
On commodity markets it was quiet with copper up 1 cent to $3.13, Crude becalmed at $100.87 and gold dipped a tiny bit to $1,299. On the Ags things were also quiet with soybeans move of +0.53% the only material one.
On the data front if you trade Kiwi then the trade balance and export, import data will be important but then it is a data free zone until the Gfk consumer confidence data in Germany tonight. UK GDP is a highlight and the market is expecting a decent quarter of 0.9% growth which will take the year on year rate to 3.2%. EU consumer confidence is also out before the really important German CPI which has the chance to make or remake the outlook for the ECB and the Euro. Expectations are of a fall of 0.1% in April but the year on year rate to rise due to low numbers dropping out to 1.4%.
In the US its the Redbook, Case Shiller house prices and Consumer confidence.