S&P Downgrades Spanish Banks, PCE & Canada GDP Next

S&P Downgrades Spanish Banks, German retail sales rose; Eurozone CPI eased less; golden week. Market turns to core PCE, personal income and spending, Chicago PMI and Canadian GDP. See in the link below Ashrafs Arabic & English interviews on Spains bad bank proposals, solvency vs. liquidity & US GDP.

USD is stronger across the board in the ongoing session. European equities are losing about 0.75% and the relative strength winners are USD and JPY while NZD is the weakest.

In an expected move, S&P lowered its rating on 16 Spanish banks just a few days after it lowered Spanish credit rating two notches to BBB+. Spain that continues to be in the center of attention published marginally better than expected GDP at -0.3% q/q and -0.4% y/y. 10 year yield is slightly lower today at 5.87%.

German retail sales rose 0.8% in March after February's -0.9% which marked the first positive month after four months of negative results. Nevertheless, EURUSD was unable to hold onto its gains from last week and declined from 1.3265 to 1.3208.

Inflation across the Eurozone eased less than anticipated in April as CPI rose 2.6% from previous 2.7% y/y. CPI has been above the 2% ECB target since January 2011 which is likely to continue to limit consumer spending.

Today marked the first day of the Japanese golden week holiday. Smaller volatility during the Asian session, especially on the JPY crosses is likely throughout the week.

The US session starts at 8:30 am ET with March core PCE price index expected higher at 0.2% from previous 0.1% (steady at 1.9% y/y). Personal income is seen higher at 0.3% from 0.2% but personal spending is anticipated lower at 0.4% from 0.8%.

Chicago PMI is due at 9:45 am ET and it is expected to decline in April to 60.9 from 62.2.

CAD traders await GDP that is due at 8:30 am and is seen higher in February at 0.2% from 0.1% m/m (2.1% from 1.7% y/y).

Ashrafs on CNBC http://youtu.be/LiPyvYzKzY8 and on AlArabiya (w/ English Synopsis below video) http://youtu.be/TPoxeOLHHdU