Awaiting China GDP After US Jobless Claims Miss Estimates

US initial jobless claims were much higher than expected but a smaller trade deficit pointed to a Q1 better growth reading. Commodity currencies were the top performers and the yen lagged on rumors of a strong Chinese GDP print ahead of the official release in the upcoming session. The market is most concerned with the release of Chinese GDP at 0200 GMT. The consensus is for 8.4% growth but rumors of a reading above 9% have significantly boosted expectations. More below.

US jobless claims data added to concern that the employment situation remains soft. Claims were 380K compared to the 355K expected. It was the highest since late January and the prior report was revised 10K higher to 367K as well.

A positive sign for first quarter growth came in the trade balance report for February. The expected $51.8 billion deficit was just $46 billion. Inflation trended lower with the producer price index slipping to 2.8% y/y in March from 3.3% in February.

The Fed’s Dudley said more stimulus may be required if the economy falters but he balanced that by saying more QE could cause inflationary anxiety. He added that it’s too soon to say the economy is out of danger. The Fed’s Plosser continued to say more easing is unnecessary.

The market is most concerned with the release of Chinese GDP at 0200 GMT. The consensus is for 8.4% growth but rumors of a reading above 9% have significantly boosted expectations. Recall the last 3 months of 2011 showed a 8.9% rise, which remain well above the 7.5% growth target for the year announced earlier. At the same time, industrial production is expected to climb 11.3% y/y and retail sales +14.8%.