20140327

Good morning,

Risk sentiment was mixed yesterday, varying with the different market sessions. In Europe, major indices were all in green despite relatively little new information to the market. Italian Retail Sales for January disappointed, but this was curbed by a better than expected Italian March Consumer Confidence. German Gfk Consumer Confidence for april came out unchanged as expected at 8.5. Euro Stoxx took home 1.1%on back of rumours of additional monetary stimulus and the EUR was generally under pressure despite.

In the US, February Durable Good Orders came out mixed, with the monthly figure showing a solid increase of 2.0% against 1.0% expected. This should have been good news for risk, but the 5-yr Note auction took focus as the result of 1.715% against 1.530% shifted allocation towards bonds, leading to a sell-off in equities -  Nasdaq closed down 1.4% -  and a bid US Dollar more or less across the board.

In Asia, the stronger JPY and AUD led equities lower with little new information to the table.

Today, the markets will be focusing on the UK February Retail Sales, where the Core MoM figure is expected to increase 0.3%. Should the figures come out stronger than expected, Cable is likely to test 1.66+levels again.

Later today, the key figure will be the US GDP for Q4, which is expected at 2.7%, but there is a bias in the analyst community towards a lower figure, based on falling net trade activity. Should the figure come out lower than expected, we expect equities take another hit with investors seeking safe havens in US treasuries. This should also send the US dollar on the bid - should 1.3745 be taken out, we could see a drop to 1.37-area before 1.3640.

Have a nice day!