Yesterday’s market action
Yesterday saw a veritable wasteland of a data calendar with no scheduled releases throughout the day. The earnings calendar was similarly barren and yielded no opportunities. Greece dominated the minds of most European market players as we heard the FT state Greece intended to default if a deal could not be reached by the end of the week. This provided Euro weakness throughout the session and this translated into dollar strength with both the EURUSD and the GBPUSD falling on the session. Cash open remained the highlight of the day from an equity perspective with individual stocks providing some much needed volatility, allowing the NASDAQ to trace higher and the S&P to regain the 2100 handle. Though the calendar was light there were plenty of underlying fundamentals to churn price action, most notably in the currency space. We saw large moves to both sides of the scale, albeit within a clear range, and many traders were able to take hold of these entries. Overall the dollar strengthened on the session with the dollar index up 0.15% up on the day.
Today’s View
This morning we saw several European constituents post their inflation data. Italy posted Final March annual inflation at -0.1%, in line with the previous preliminaries. The key data for the morning was the UK release of inflationary measures. The CPI annual figure for March posted flat at 0% with the core year-on-year figure posting a fall to 1.0%, missing the expected 1.2%. The PPI Input figure marginally beat expectations but the RPI annual missed the headline posting 0.9% instead of the expected 1.0%. This slight miss on the Core number allowed the GBPUSD to make new lows on the session, testing the 1.46 handle to the downside before retracing the entire move. Ahead we have JP Morgan, Wells Fargo and Johnson & Johnson reporting their earnings before the US Cash Open. We also have Retail Sales from the US expected at 1.0% and 0.7% ex autos, followed by PPI Final Demand at 0.2% expected for the year-on-year. Ultimately we remain bearish US stocks in the medium term as we expect the stronger dollar to continue to affect corporate profits, making goods less competitive in the global marketspace.
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