BoJ and US GDP stun markets

Yesterday’s markets

29th April 2016

  • JPY BOJ Outlook Report
  • EUR German Prelim CPI m/m: -0.2%
  • JPY BOJ Press Conference
  • EUR Spanish Flash CPI y/y: -1.1%
  • EUR Spanish Unemployment Rate: 21.0%
  • EUR German Unemployment Change: -16K
  • USD Advance GDP q/q: 0.5%
  • USD Unemployment Claims: 257K
  • USD Advance GDP Price Index q/q: 0.7%
  • ANZ Business Confidence: 6.2
  • AUD PPI q/q: -0.2%
  • AUD RBA Assist Gov Debelle Speaks

Early yesterday morning the Bank of Japan surprised the market with its lack of action. Economists’ expected further easing from the BoJ in response to the strengthening Yen. However, Governor Kuroda decided to wait and monitor the effect of negative interest rates before implementing any further monetary policy changes. The Bank of New Zealand also followed suit this week keeping their policy stance unchanged. 

The main focus yesterday surrounded US GDP, as we gained the first release of Q1 Gross Domestic Product. The US economy expanded at the slowest pace in two years as US consumers cut back on spending and companies tightened their belts in response to the weak global financial conditions. US GDP registered a reading of 0.5% against a forecast 0.7%. US Jobless claims was released simultaneously and kept the Greenback resilient, posting a better than expected 257k.

Today’s markets

28th April 2016

  • EUR German Retail Sales m/m
  • EUR Spanish Flash GDP q/q
  • GBP Net Lending to Individuals m/m
  • EUR CPI Flash Estimate y/y
  • EUR Core CPI Flash Estimate y/y
  • GBP MPC Member Cunliffe Speaks
  • USD Core PCE Price Index m/m
  • USD Employment Cost Index q/q
  • USD Personal Spending m/m
  • USD Chicago PMI
  • USD Revised UoM Consumer Sentiment
  • USD Treasury Currency Report

A host of second tier data will be seen in the morning with attention on the Euro Flash CPI figure which comes into focus again. As the ECB try to tackle deflationary pressures this yearly figure will be watched by the markets to see if the current efforts of the central bank are working. Inflation for the single currency zone is currently at 0%, but if this falls again to -0.1% as forecasted this could put further pressure on the Euro. In the afternoon, the Chicago PMI and the revised University of Michigan Consumer Sentiment will be released, with both gauges expected to fall pretty much in line with previous reading.