US GDP revision unlikely to yield any surprises

Yesterday’s market action

Yesterday saw a move towards dollar strength, with the EURUSD making lows on the session. This was exacerbated by the capped reaction to UK Retail Sales figures. Equities began their day on the back foot with both European and US Bourses moving lower after the European open. The risk associated with Yemen has continued to perforate the market space, leading to wide-based falls in US equities. The S&P was notably flat on the session yesterday as traders saw the product oscillate around its opening price. On yesterday’s data-front employment figures from Initial Jobless and Continuing Claims posted lower than expected with revisions lower to previous numbers. The preliminary PMI reading for March ’15 also weighed in higher by 1.5 points to the highest level seen since September 2014. On the monetary policy speaker front Draghi attempted to reassure market participants that the ECB was on target to reach the month’s €60bn target.

Today’s View

This morning saw Japanese inflation numbers print with a reading of 2.2%, 0.1% below the 2.3% expectation. Core ex-food and energy also printed below expectations: taking into account the sales tax hike from April last year the real-term tangible inflation figures remain flat. We had very little data flow from Europe this morning with Bank of England speakers being the highlight. Haldane, Broadbent and Carney all spoke before 11am this morning, with hawkish commentary from the Governor allowing the pound to appreciate against the dollar. This also translated into the EURGBP which has drifted lower after yesterday. That European holiday is looking mighty attractive. We also heard rumours from Germany that the Greek Finance Minister Yanis Varoufakis was to resign; ultimately these rumours were both ignored by the market and denied by the Greek parliament. Ahead we have the US GDP for Q4; this is the third reading and is therefore unlikely to yield further surprises. We also have US Personal Consumption and Core PCE released but again, effects are likely to be limited due to unsurprising releases. At 2pm we have University of Michigan Sentiment for March, expected with a reading of 92. This is the headline data for the afternoon and should be prioritised; traders are recommended to remain risk-aware in this low volume environment to avoid unnecessary losses after a good week’s trading.