20140411

Good morning,

Risk was off yesterday throughout yesterday's session following comments from China's Premier Li, that the country would not introduce any short term stimulus in order to keep the pace of the Chinese economy going well. In the US, initial jobless claims came out at the lowest levels since 2007, which supports the Fed with regards to the tapering of asset purchases going forward. On a geopolitical level, the threat from Putin to cut gas supplies to Ukraine and the EU did not have a big impact in the markets, but will have if Putin takes action. US indexes followed Europe lower with Nasdaq losing more than 3%.

In FX markets, the USD continued on the offer against most peers. EUR/USD is testing the 1.39-figure while USDJPY, despite closing below trend support from Feb 2014 lows, has recovered overnight and is back above, currently trading at 101.80-area. For precious metals, gold close is flirting with the 50-day SMA and a close above would open up for a test of 1335-area.

This morning we have seen German and Spanish inflation figures coming out in line with expectations, so no surprise to the markets there. This afternoon, the release of US March PPI, but the trigger for end of week volatility will be the preliminary April Michigan Consumer Confidence, expected at 81 vs. 80 prior. Should the figure disappoint, we could expect a continuation of the risk aversion.

Have a nice weekend.