Intraday Market Thoughts

EURUSD Under 55 DMA Chinese GDP Disappoints; CPI Next

by Patrik Urban
Apr 13, 2012 12:38

Chinese GDP slows; Spain in center of attention; UK PPI declined and German CPI unrevised. Markets turn to CPI, UOM consumer confidence and Bernanke speech. EURUSD struggles at the 55 dma of 1.3215.

The USD has been trading within a narrow range since the beginning of the London session. European equities are losing about 1% and the relative strength winner is CAD.

Rumors of a strong Chinese GDP that boosted risk appetite yesterday proved unfounded as Chinese growth slowed considerably to 1.8% from 2.0% q/q and to 8.1% from 8.9% y/y. The impact was the strongest on the AUD that fell from 1.0450 to 1.0368 and currently trades around 1.0400.

EURUSD struggles at the 55 dma of 1.3215, with support creeping at 1.3130 trendline.

Spain is again in the center of attention after Bloomberg reported that Spanish banks have borrowed in March EUR 227.6 bln from the ECB, significantly more than EUR 152.4 bln in February, confirming concerns that the LTRO liquidity is drying up. Spanish 10 year yield pushed higher on the news and reached 5.92%. Not surprisingly, over the past few days the ECB officials have been reiterating that the ECB can buy sovereign debt via the SMP program.

On the data front, UK producer inflation slowed in March as input prices declined to 5.8% from previous 7.8% while PPI output prices fell to 3.6% from 4.1% on annual basis and German final CPI was unrevised in March at 0.3% m/m and 2.1% y/y in line with the initial estimate.

The NY session will bring March CPI that is expected to decline to 2.7% from 2.9% on annual basis with the core figure remaining steady at 2.2%.

The University of Michigan consumer confidence that is due at 9:55 am ET is seen higher in April at 76.5 from previous 76.2.

The last event that is likely to heighten volatility this week will come at 1:00 pm when the FED chairman Bernanke delivers a speech in NY.


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