German and Spanish Inflation Prints in Focus

The main focus today will be on the German and Spanish flash inflation data, which will provide the first sense of what to expect from the euro area HICP figures tomorrow. Generally, we forecast gradually easing headline inflation, but see core inflation pressures still remaining at elevated levels. Euro area Economic Sentiment Indicators will also be released for March today.

Eyes on US GDP and Eurozone CPI Data

Due today, the US will reveal its latest GDP update. The expectation is that the US economy grew 2.7% in Q4 with a stable GDP price index at around 3.9%.

Dollar Showed No Clear Directional Trend

On FX markets, the dollar showed no clear directional trend. DXY closed modestly higher near 102.64. EUR/USD finished the day unchanged at 1.0845. USD/JPY rebounded sharply from a close near 130.9 on Tuesday to 132.86 yesterday evening.

AUD/USD – Will RBA Take a Breather Next Week?

The Australian dollar has edged higher and is trading at the 0.6700 level in Europe. The RBA meets next week and the markets have priced in a pause. In the US, unemployment claims and GDP were within expectations.

Challenge for ECB: German Inflation Undefeated

Preliminary estimates for Germany indicated an increase in consumer prices in March by 0.8% m/m and 7.4% y/y, which is higher than the average growth forecasts of 0.7% m/m and 7.3% y/y. In March last year, prices jumped by 2% at once, creating a high base for comparison, which caused a slowdown in the year-over-year rate.

Sunset Market Commentary

German Bunds underperformed US Treasuries today with US yields gaining “only” 4 bps at the front end.

Cliff Notes: Calm Returns to Markets

Softer updates around the Australian consumer and inflation have strengthened the case for a pause at next week’s April RBA policy meeting. Global market sentiment meanwhile improved over the week as concerns over US and European banks eased.

Crude Oil: Will "Banking Crisis Send Prices Even Lower"? Ha!

Crude Oil still looks lower. Crude has yet to step into the meat of the [strong Elliott wave decline] we're anticipating, but it still seems like the likely path.

All Eyes on Inflation Data

The main focus today will be on the euro area March flash HICP figures. The preliminary data released for Germany and Spain points towards headline inflation cooling to 6.7% y/y, lower than initially estimated. That said, the ECB focuses on core inflation, which has likely remained elevated.

Euro Inflation Falls, But

If the upside pressure in core inflation persists, no matter how fast we see the headline inflation fade, the European Central Bank (ECB) will stick to its guns to abate inflation and the euro will continue its journey higher.