BOJ Cuts 2011 Growth Outlook; US Q1 GDP Set to Slow

The Bank of Japan lowered its baseline target for the current fiscal year to 0.6% from 1.6%, pushing back expectations of faster recovery to FY12/13. Ranks of Germany's unemployed fall but at a slower pace. The first print on US Q1 GDP is expected to show the slowest growth in 3 quarters.

Euphoria from the Bernanke press conference that saw the dollar plummet to the benefit of just about everything else has given way to a consolidation, while concerns over a more pronounced slowdown in the global recovery resurface. EUR and AUD are retracing their impressive gains, NZD remains under pressure in the wake of a dovish RBNZ statement, while gold hit a new high at $1,533/oz. Following the 2011 GDP forecast downgrade from the FOMC, the Bank of Japan lowered its 2011 growth outlook to 0.6% from 1.6% due to the earthquake related production disruption. The BOJ has allowed for faster growth in FY12/13 at 2.9%, up from 2.0% prior target.

Similarly, the advanced figure on Q1 GDP in the US is expected to slow to 1.9%. This is in line with Fed Chairman's Q/A forecast that Q1 will likely come in slightly below 2%, but also marks the lowest sequential growth in at least 3 quarters. Special attention will once again be paid to the inventories component showing a large decline in the prior report.

Economic news out of Germany was a mixed bag. The ranks of unemployed fell by 37K - the fourth consecutive month of decline - but the unemployment rate rose to 7.1%. Furthermore, 37K decline was the lowest drop in 3 months, suggesting the hiring in the reinvigorated manufacturing base appears to be slowing. This also sets the stage for tomorrow's German sales expected to show a modest uptick.

US earnings ahead of the open are highlighted by Exxon Mobil looking to avoid a disappointing result seen from ConocoPhillips overnight. Outside of the oil prices screaming higher, XAOM stands to benefit from a 7% dividend increase announced before close on Wednesday.

By GG AshrafLaidi.com staff