Ranges:

The markets were on edge with the upcoming Non-Farm payrolls data and European elections. This was reflected in the muted ranges leading up to the US data.

And the Payrolls data didn't disappoint traders, coming in much lower than expectations. Hiring slowed sharply in April, with 115K new jobs versus 154K new jobs in March, marking the third sequential month of slowing job gains. However, analysts pointed out that the March figures were revised higher and generally blamed the weak showing on "payback" from the gains seen in the warmer winter months. The unemployment rate fell slightly, thanks to another decline in the participation rate.

The USD rallied aggressively across the board. Equities were belted and commodities drifted off as well, with Gold being the exception. The Euro, Sterling, Aussie, Loonie and Kiwi were all off over 100 points. PIMCO's Bill Gross won the "obvious game" with his response to the report by again pointing out that unemployment has become a structural problem and that fiscal and monetary policy are not working very well at all.

Crude has made big moves to the downside: it was around $102.50 pre data, but sold off down to $98.25 afterwards. The yield on the 10-year UST fell below 1.90% to levels last seen in February.

So another huge "Risk Off" session as we lead into the European elections. This doesn't bode well for the Monday open as this downside momentum will surely be highlighted if the incumbent governments are ousted. The election uncertainty in Europe is already weighing on Euro and further troubles in the US economy is only going to exaccerbate the situation.

Major Focus Today: 

Asia: It will be a choppy open as the market awaits news of the weekend European elections. The major focus will be on the Australian retail sales data. Further weakness in this data and the market will be calling for more immediate rate cuts.

Europe: The market will be anticipating news of the election results. They may be disappointed as the result of the Greek election may not be known for sometime. German factory orders give us the best fundamental directional trade.

North America: It should be a pretty quiet start to the week but the currency market will be cautious following Friday's negative equity close.
                                         

Key Events – Release: (times are gmt)

02.30 AUD – Retail Sales & Building Approvals

08.15 CHF – CPI

UK Holiday

11.00 EUR – German Factory Orders

13.30 CAD – Building Permits

Quote of the day: "Have patience with all things, but chiefly have patience with yourself. Do not lose courage in considering your own imperfections but instantly set about remedying them."

Ranges:

There’s been an eerie calm about the market the past 12 hours. In Europe, Spain followed the UK into official recession territory and drumbeat of bailout fears and anti-austerity commentary resurfaced, yet the Euro only drifted off 30-40 points. Anyone besides me think there’s something extremely wrong with that picture!

The question beggers….Who’s going to be Merkels new toy boy, as it appears Francois Hollande doesn’t swing with Germans!

It didn’t get much more exciting in North America. Luckily the Canadian GDP data didn’t let us down. It came in much weaker than expected and the CAD dropped like a lead balloon. USD/CAD pair was back at 0.9865 area after testing 0.9805 earlier on pre dat release. That paints a different picture to the one BOC Gov Carney was talking about last week. I think we cxan take any immediate stimulus withdrawal off the table and rates should remian low in Canada for the foreseeable future.

The only other move of note was on USD/JPY. It tested below the 80 handle in mid-morning trading knocking out a bunch of long position stops. It was pretty swift so I’d say it was more of a stop loss run than anything else. It’s not a good sign for the BOJ though who were hoping the additonal easing measures announced last week would weaken the Yen further and give them half a chance to sell some products offshore. We all know local demand is not going to get them out of the duldrums. So its back to the drawing board for the BOJ.

US equity markets were rolling over this morning following last week’s solid gains. Note that the S&P500 was just about 1% away from its recent four-year highs by the end of last week, making for a very sensitive market.

S&P futures turned negative before the US open, and cash trading sent the index steadily lower over the first hour of trading. Two negative regional manufacturing surveys have not helped matter: the April Dallas Fed index widely missed expectations and the Chicago Purchasing managers’ index hit its lowest level since November 2009.
Major Focus Today:

Asia: The market is high with anticipation for the upcoming RBA announcement. We are tipping a 50 basis point cut whilst the market is at 25 points. Keep an eye on the statement for the kicker on future rates.

Europe: The UK manufacturing data is the main game in Europe especially with most of Europe on holiday.

North America: Only one major release to focus on: ISM Manufacturing PMI. Beware there is a bunch of FOMC members speaking later in the day.

Key Events – Release: (times are gmt)

04.30 AUD – RBA Rate Decision & Statement

08.30 GBP – Manufacturing PMI

14.00 USA - ISM Manufacturing PMI

Quote of the day: “Success is having ten honeydew melons and eating only the top half of each one.”

Ranges:

I had to check the calendar a few times during the day as the markets seemed so quiet I thought it was still the weekend. But that's to be expected with the two big Asian powerhouses China and Japan both out on holidays.

The currencies were getting hit first this morning on the back of a weekend FT article suggesting France presidential front-runner Francois Hollande is pledging to delay ratifying European fiscal compact treaty without negotiations to add growth measures. This is the beginning of the end for the Euro as Angie Merkel has already stated the treaty is not renegotiable. The article was quick to add Hollande's response last week "It is not for Germany to decide for the rest of Europe….getting lots of signals from other governments." Hollande is expected to beat Sarkozy in next Sunday's presidential runoff by 54-46% margin.

Euro drifted off 20 points and looked set for lower levels…but there was no follow through. It consolidated around 1.3230 before regaining the losses in what was otherwise a dead session. The Aussie was a little more valotile but it has also regained earlier losses. Sterling on the other hand defied the weak sentiment and didn't move at all.

In China, one of the incoming PBoC advisors, Song Guoqing, forecasted 2012 CPI around 2.8% (official target 4%) and GDP around 8.4% (official target 7.5%). There was no impact on the markets. Also from the bleachers, Chinese State economist Fan Jianping was also more upbeat on growth and confident China would contain inflation, targeting 2012 GDP at 8.5% and CPI at 3.5%.

The forex market is awaiting the European open to get a clearer view of how Europe see's the latest headlines.

Major Focus Today:

Asia: The market is on hold until tomorrow's RBA rate decision. In the meantime it's going to be a loose trading session as various European news/sentiment hits the market. It doesn't look good so expect the USD to rally as we await the European open.

Europe: There is a bunch of peripheral data due for release in Europe but expect this to be superseded by the upcoming elections and news articles from the weekend. It will be a choppy session as traders thrash out the overiding sentiment for the Euro.

North America: No major US data releases so look to the equity markets for direction. Canadian GDP data looks to be the best directional opportunity.
                                         

Key Events – Release: (times are gmt)

08.00 EUR – German Retail Sales

12.30 CAD – GDP

13.55 USA - Chicago PMI & Personal Spending

Quote of the day: "Arrogance causes nothing but trouble; it is wiser to ask for advice."

Ranges:

The weekends are proving to be a hotbed of activity for protestors across Europe. There were numerous marches/protests across most European cities as the latest austerity measures and shrinking economic conditions hit home. Unemployment is escalating at a rapid rate of knots and it seems nothing can stop the calamity.

The currencies are getting hit this morning on the back of a weekend FT article suggesting France presidential front-runner Francois Hollande is pledging to delay ratifying European fiscal compact treaty without negotiations to add growth measures. This is the beginning of the end for the Euro as Angie Merkel has already stated the treaty is not renegotiable. The article was quick to add Hollande's response last week "It is not for Germany to decide for the rest of Europe….getting lots of signals from other governments." Hollande is expected to beat Sarkozy in next Sunday's presidential runoff by 54-46% margin.

Miraculously the Euro is only off 20 points at 1.3230 after closing around 1.3250 on Friday. The AUD/USD is feeling the heat a little more down around 30 point at 1.0440 and this probably stems from the fact that local traders are more inclined to trade the Aussie after numerous false moves in Euro during the Asian timezone, particularly on Monday's.

Back to Friday's trading. The USD remained weak during the North American session, and the EUR/USD continued to probe the upper end of its 4-week range. USD/JPY was re-approaching its pivotal support at 80.30 with USD sell-stops building below this level. As mentioned many times the 80.30 level corresponded to the former high after the Aug 3rd 2011 BoJ solo FX intervention. It was broken back on Feb 22nd and has been tested numerous time since then.

The lower rate of US GDP growth in Q1 is having less of an effect this morning than you might expect as investors home in on some of the better components in the data. The headline advance Q1 reading of +2.2% missed expectations and was lower than the +3.0% rate seen in Q4, however the decline was more or less priced in already.

Analysts have been focusing on the higher personal consumption expenditure component, higher export growth component and a big sequential increase in residential fixed investment, all of which are taking over from inventory restocking to drive growth. The final reading of the April University of Michigan confidence survey was a bit higher than the preliminary look, also aiding sentiment this morning.

Equities and commodities both closed in positive territory adding to the weak USD theme.

It's going to be a busy week as we approach both the Greek and French elections. The Spanish are camped out in Madrid and the Dutch, well their just running free ball as the Government through the towel in last week. We also expect the RBA to cut rates by 50 basis points tomorrow and we have US Non Farm payrolls on Friday. It could be a big week for the USD. Early signs point to a much higher USD by the end of the week.

Major Focus Today:

Asia: The market is on hold until tomorrow's RBA rate decision. In the meantime it's going to be a loose trading session as various European news/sentiment hits the market. It doesn't look good so expect the USD to rally as we await the European open.

Europe: There is a bunch of peripheral data due for release in Europe but expect this to be superseded by the upcoming elections and news articles from the weekend. It will be a choppy session as traders thrash out the overiding sentiment for the Euro.

North America: No major US data releases so look to the equity markets for direction. Canadian GDP data looks to be the best directional opportunity.
                                         

Key Events – Release: (times are gmt)

08.00 EUR – German Retail Sales

12.30 CAD – GDP

13.55 USA - Chicago PMI & Personal Spending

Quote of the day: "Arrogance causes nothing but trouble; it is wiser to ask for advice."

Ranges:

The last few sessions have been pretty quiet on the currency front. There was very little activity in Europe despite S&P downgrading Spain to BBB+ from A. EUR dribbled off from 1.3250 down to 1.3200, but news that various European opposition parties seem to be close to a deal for the FY13 budget that comes in at or below the 3% deficit-to-GDP ceiling, drove the Euro back to the 1.3250 level. Nothing to see here people, move along!

The US company earnings season continues to baffle traders. Equity indices are in the black this morning despite several notable earnings misses among major companies and some weak US data. The declining trend in weekly jobless claims seems to have flattened out for the moment, with this week's initial claims slightly higher than expected at 388k and the March Chicago Fed Activity Index fell a bit. Investors took comfort from the March pending home sales data, which was much better than expected increasing 4.1% versus 1.2%. The NAR commented that rising sales are bringing down inventory and creating much more balanced conditions around the county.

The focus in FX markets is turning to today's BoJ rate decision and the first reading of US Q1 GDP. Reports circulated early in the New York session that it was unlikely the BoJ would take significant easing measures at Friday's meeting. Analysts and fixed income markets had already been pricing in easing for the meeting, debating whether the asset purchase increase would be ¥5T or ¥10T.

BOJ Governor Masaaki Shirakawa also said more policy easing would be considered in the coming months when more accurate data is available. Bless him for trying…..next! USD/JPY was below the 81 handle but well above the pivotal 80.30 pivotal support. I'm not exactly sure what the purpose of this is, nor what the impact will be. It's more a case of Japanese officials being seen to be doing something to keep their jobs then anything else.

As the Asian session kicks off the USD is clawing back some lost ground following the FOMC on Wednesday. The Euro is approaching major short term support at 1.3175. We are expecting this to hold ahead of the European session and the release of US GDP data.

Major Focus Today:

Asia: It's been a long time coming but we are actually awaiting some key data out of Japan. The BOJ press conference later in the session is the key. Unfortunately there is no set time for this release.

Europe: There are a few peripheral releases due but focus will be on the Italian 10 year Bond Auction. Expect Spain to come under increased pressure. Any further negative news out of Spain will drive the Euro lower.

North America: All eyes on the Advance GDP data. This is our first look at Q1 activity and will be a precursor for future Fed decisions. It's a very good directional release.
                                         

Key Events – Release: (times are gmt)

Tentative – BOJ Monetary Policy Statement & Press Conference

Tentative – Italian 10 year Bond Auction

06.00 EUR – German GfK Consumer Confidence

12.10 CAD – BOC Governor Carney Speaks in Ottawa

12.30 USA – GDP

13.55 USA - University of Michigan Consumer Sentiment

Quote of the day: "Never eat more than you can lift."

Ranges:

What the??? You know how I was saying some days the market just doesn't make sense. Well this is one of those days! Markets are ignoring plenty of bad news this morning to focus solely on Apple's remarkable earnings results.

The Nasdaq was up nearly 2.5% earlier this morning, led higher by Apple, while the S&P 500 and DJIA are somewhat less frothy. Shares of Apple are back above $600 this morning, up 10% or so on the firm's crushing Q1 outperformance. The Apple doubters are eating their words this morning after the firm reported that it sold more than 35M iPhones in Q2, putting it at the high end of nearly all expectations. iPad shipments were up a whopping 151% y/y. Apple's CFO said that international sales accounted for 64% of Q2 revenue.

Meanwhile, March durable goods orders data racked up the biggest decline in three years and the total February durables were revised lower, raising concerns about softness in US economic data. 

In Europe, the peripheral debt front was quiet, but the Q1 advanced UK GDP data officially puts Britain officially back in recession (and puts PM Cameron on the hot seat). Sterling dropped from 1.6140 to 1.6080 in quick time as the bad news hit the market. The EUR/USD had a quick dip before regaining the 1.32 handle and dealers continue to look for an excuse to gun for buy-stops building above the 1.3250 area. Front-month cruse is above $103; note that there has been little reaction to comments from the Iran Ambassador to Russia, who said that Iran is considering a halt to its nuclear program in order to avoid European oil embargo.

The FOMC came and went without too much fanfare. As expected the Fed said rates would be on hold until 2014. Helicopter Ben had a few interesting comments though:
 

• Policy Statement indicates we are continuing our "highly accomodative" policy.
• Fed has been bold and aggressive with easing policy.
• Reiterates the Fed is prepared to do more if needed.
   

So nothing major here. French President Sarkozy replied to T-Bone Geithners comments last week that in order for Europe to increase stimulus they should spend more, not cut budgets: "All of Europe wants growth yet Governments cannot spend money it does not have." 

Well clearly they should adopt a few loose policies the US are applying or maybe if T-Bone gave the European chaps a few of those blank cheques he's been throwing around they might have half a chance. EUR consolidated above 1.32 and didn't budge on the comments. Meanwhile the Sterling short squeeze had started and the rally in US equities saw the earlier sell off covered with GBP rallying back to 1.6180. Clear madness??

Next up on the chopping block was the RBNZ MPC meeting. The RBNZ left rates unchanged as expected and there was very little impact on the NZD but did state:
 

• Strong currency "without anything else changing" could prompt re-assessment of policy.
• Reiterates domestic economy showing signs of recovery
• Recovery will strengthen later this year as Chistchurch Rebuild gets going

Not to be outdone BOC Governor Carney had his own press conference and had a few clangers:
 

• BOC to proceed with caution on any rate hikes
• Reiterates current policy is exceptionally accomodating
• Withdrawal of stimulus would significantly hurt consumers
• Sees signs of extreme strength in condo market
• Unwise for Canada exporters to rely on weak currency

The Funds continued to consolidate around 0.9820 afterwards but this was as much about a weak USD as a strong CAD.

The Aussie dollar got caught up in the action and squeezed all the way back to 1.0370 taking out short term short positions above 1.0350. We still feel short Aussie is the way to go especially with the expectation of an RBVA rate cut next week. But we need to reassess our levels after last nights moves. USD/YEN remians steady on the sidelines at 81.30 despite the BOJ's attempts at talking up the chance of extra stimulus measures.

Major Focus Today:

Asia: It's going to be a pretty quiet session and don't expect much out of Australia as most traders are nursing Anzac day hangovers.

Europe: There are a few peripheral releases due but the main attention will be on ECB President Draghi's speech.

North America: We have the weekly unemployment claims data and the last piece of the housing puzzle. Either of these could provide direction if there is significant variance.
                                         

Key Events – Release: (times are gmt)

07.30 EUR – ECB President Draghi Speaks

12.30 USA – Unemployment Claims

14.00 USA - Pending Homes Sales

Quote of the day: "Be the change that you want to see in the world."

Ranges:

OK so if todays' CPI figures weren't bad enough to convince Messrs Stevens and co. that we need a rate cut then it's the rubber chicken treatment for them. Expectation was 0.6% and came in at 0.1%. AUD got a quick 60 tick spanking that would make Peter slipper smile.

Treasurer Swan on the wires telling us that lower CPI doesn't mean lower growth!! Hello earth to Swan, earth to Swan come in Swanny!

Some interesting contrarian views today on housing and mortgages. Veda’s Consumer Credit Demand Index: Australia mortgage demand in Q1 rose 1.5% y/y; First increase in 2 years – SMH- Agency risk director: "Turning points in mortgage inquiries usually occur one to three quarters ahead of turning points in house prices, an early warning sign which could indicate that after a continued decline, mortgage inquiries may have bottomed out."

And then S&P comes out with loans underlying residential backed mortgage securities greater than 30 days are in arrears rose in the 4th quarter. Hmm anyone interested in buying a house-YOURS!!

Late in session AUD paring some gains as likely shorts are profit taking, equities up smalls but EUR getting a bit of strength into the London morning. GBP data tonight might present an opportunity but definitely keep an eye on the CAD before you head off for some sooty as you might get a good opportunity on the retail sales.                               
  .

Major Focus Today:

Asia: It's a big day for the Aussie dollar with the Quarterly CPI data due.

Europe: The rumblings across Europe are getting louder so keep an eye on the bonds for blowouts. In the meantime we have some medium impacting data out of the UK.

North America: We have a few medium impacting releases with the focus on the Housing sector. First up the S&P/Case Shiller composite followed by the New Home sales data.
                                         

Key Events – Release: (times are gmt)

01.30 AUD – CPI

08.30 GBP – Public Sector Net Borrowing

12.30 CAD – Retail Sales

14.00 USA – New Homes Sales

Quote of the day: "Anybody with money to burn will easily find someone to tend the fire."

Ranges:

It's very clear the financial market landscape in Europe is about to come under huge pressure and it may well be the final throw of the dice for the Euro. French elections, the collapse of the Dutch government and the wretched preliminary euro zone PMI data is destroying European equities, with the CAC ready to close down 3% and the DAX even worse, poised for a 3.5% drop.

With Socialist French presidential candidate Hollande leading Sarkosy by 27.9% to 26.7% in some widely-cited exit polls, traders are assuming the worst about the outcome of the second round of voting scheduled for May 6th. In addition, no one is very comfortable with the fact that far-right, euro-skeptic candidate Marine Le Pen took nearly 20% of the vote.

In the Netherlands, weeks of negotiations within the ruling coalition of PM Rutte and conservative euro-skeptic Geert Wilders have broken down over austerity measures, Rutte to tender his resignation, triggering new elections.

The Euro didn't like it either dropping from 1.3207 down to 1.3105. It's recovered some ground at the end of the US session as the market remains cautious about IMF announcements regarding additional funding for the European zone. With no other major data releases the rest of the currencies simply tracked the Euro, but without the same amount of volatility.

In the US, major indices are down sharply on overall risk aversion, worsened by multiple negative US corporate stories. Note that despite the trouble in Europe, EUR/USD remains pretty well contained within its recent 1.3000 to 1.3225 band. WTI crude is hovering around the $102 handle.

The big New York Times expose on Walmart's Mexico unit is driving shares of the retailing giant lower this morning. With headlines recount the allegations of bribery to local officials to get stores opened faster in Mexico, on all major news sources, Walmart is in damage control mode and shares of WMT are down 4%.

Also in focus this morning is Kellogg's big guidance cut. The firm warned that weak growth in certain US segments and softness in Europe would reduce FY12 revenue, and its initial FY12 earnings guidance was well below expectations. Shares of Kellogg are down 4.5%, while other major consumer staple names are down nearly 2% in sympathy.

Quite strangley the softer tone in the US equity market hasn't followed through on the currencies, leaving many traders scratching the heads for answers. I can't see any! We've got the FOMC meeting on Wednesday but it's unlike the market holding back for that especially since it's two days away. We close the session with most currencies back trading mid range.

Aussie CPI data today probably the best trading opportunity for the week! This is a maximum limit opportunityas any variance either way will be extremely directional. The market is factoring in a rate cut already so any major weakness and they will be calling for 0.5% next week. Any strength and the rate cut will be off the table and the currency should rally aggressively. Our worse case scenario is a result right on expectations!

Major Focus Today:

Asia: It's a big day for the Aussie dollar with the Quarterly CPI data due.

Europe: The rumblings across Europe are getting louder so keep an eye on the bonds for blowouts. In the meantime we have some medium impacting data out of the UK.

North America: We have a few medium impacting releases with the focus on the Housing sector. First up the S&P/Case Shiller composite followed by the New Home sales data.
                                         

Key Events – Release: (times are gmt)

01.30 AUD – CPI

08.30 GBP – Public Sector Net Borrowing

12.30 CAD – Retail Sales

14.00 USA – New Homes Sales

Quote of the day: "By taking no chances your doings may be perfect, but you will do few things."

Ranges:

Welcome to Monday…and yes once again the Euro opens up lower then where it closed on Friday. We had the G20 and IMF meetings over the weekend but it could be one of dozen reasons why it opened lower.

The IMF policy board has warned Europe and other developed economies not to excessively cut budgets over the near-term. Policy-steering committee chairman Shanmugaratnam: "Everything that we do should be supportive of medium-term fiscal consolidation, particularly in advanced economies… If we don't get back to its potential levels, then fiscal sustainability is not possible either." They also suggested that the ECB has room to lower policy rate further given expected decline in inflation. Then ECB's Weidmann responded negatively to recent calls for more ECB intervention and said he was against allowing the EFSF directly lending to banks.

Not to be outdone Chinese Premier Wen weighed in stating the obvious: "Global debt and financial crisis is not over; Risks to global economy still remain". I guess he's looking to buy on the nxt dip to add to their European holdings.

But maybe more impacting is the widespread unrest in Europe. The Dutch are blowing up over their austerity measures, the French are ready to get rid of Sarkozy, the Greek governments head is on the chopping block, the Spanish government doesn't have a chance to stay in power and there are street protests in Prague. Not happy at all. This situation is only going to escalate as the elections roll through Europe over the next Month.

Back to friday trading: There was good news about IMF funding and another solid showing in Germany's April IFO survey kept nearly all European equities in the black. Some decent US earnings also helped support the tone in markets, and US indices are making steady gains in mid-market trading.

Participants in the G20 meetings are distracted by the IMF funding story, where various sides have been arguing about influence over the organization and appropriateness of giving more funds to the IMF. It appears that the IMF will get at least $400B in extra funds if not more, depending on China's contribution (which could take either days or weeks to resolve). Yields on 10-year Spanish and Italian debt remain elevated, and the US 10-year yield is not moving above 2% despite the mild risk-on appetite being seen this morning. WTI crude is elevated, with the front-month contract poised to go over $104.

Risk appetite gained momentum through the early New York session, sending the USD lower against the major European pairs. EUR/USD remained pinned to the upper portion of the session trading range around the 1.32 handle. The Aussie and Kiwi traded back towards the 1.0380 and 0.8180 levels. Sterling maintained it upside momentum following last weeks positive employment data and BOE  hawkish minutes.

In the background (now in the foreground), traders were focused on the upcoming first-round presidential elections in France on Sunday, where Socialist Hollande appears to have a very strong lead on President Sarkozy. Spain is still simmering, and UAE Central Bank Gov commented that Spain would likely to require assistance from Europe and outside the region, adding that the Gulf States may be willing to offer assistance. Let's just hope so for their sake!

Major Focus Today:

Asia: It will be another choppy start to the week as the European news filters through. It may be wise to wait for the European open to get the full impact of the various news. We have Chinese HSBC Manufacturing data to spice the local market up.

Europe: There is a load of peripheral data due for release but there has been so many varied news releases over the weekend it is hard to work out what Euro/Usd position to hold. Square perhaps!

North America: No major data releases scheduled so look to the equity market for direction.
                                         

Key Events – Release: (times are gmt)

01.30 AUD – PPI

02.30 CNY – HSBC Flash Manufacturing PMI

Quote of the day: "It takes just as much time to be negative as to be positive but the latter brings you further."

Ranges:

The European markets were steady overnight as the French and Spanish debt auctions came off without a hitch. Spain actually sold more 2 and 10 year debt than expected on relatively strong demand.

However, as US traders came to their desks the good, old European sovereign downgrade rumors began circulating for the first time in a few weeks, driving risk-off trading and actually forcing yields on the German 10-year bunds to record all-time lows under 1.70%. There was an attempt to squelch the rumors by Fitch, which stepped out and reiterated its AAA sovereign rating for France.

US data was mixed: initial weekly jobless claims have stopped declining, raising concerns about employment. The April Philly Fed survey missed expectations and dropped to lows seen back in January, however the employment component was very strong, hitting its highest level since last May. Analysts suggested the strange weather patterns are disrupting the series. Front-month WTI crude is flat on the day, around $102, and the US 10-year yield is still under 2%.

EUR/USD tested the key 1.3070 area on the risk aversion seen earlier this morning, however it has regained its composure to test back above the 1.31 handle mid morning. Overall the pair is still keeping to recent ranges despite choppy price action thanks to sovereign concerns. The yen also reflected the spate of risk aversion, and USD/JPY moved off its earlier highs of 81.73 to test below the 81.40 by mid-morning.

Much was made in the financial news media this morning about the "strong" results from Bank of America and Morgan Stanly, and it is true that headline earnings totals at both firms crushed expectations. However, debt valuation adjustments had a huge impact in the quarter for both BoA and Morgan Stanley as narrowing credit spreads forced both banks to take sizable one-time accounting charges. That's code for…we had to bottom draw three quarters of their portfolios as they are too toxic for the accountants to handle.

Reporting season has been dominating trade in the US and today was no exception. What is odd though, there have been a huge amount of companies plus banks beating all profit expectations, but we are not seeing any significant rallies in the equity markets. Did they all under estimate their earnings and the market is on top of this or are we about to see the equity markets taking a major pasting?? I think the latter.

No other major news of note. We have the G20 and IMF meetings thgis weekend so don't expect too much activity on the currency front.

Major Focus Today:

Asia: The week is basically done. No data of note and with the upcoming G20/IMF meetings the markets will take a deserved break.

Europe: We've got two decent releases to provide us with some direction before we hit the G20/IMF band wagon. First up the German Ifo data followed closley by the UK retail sales. These are both good opportunities but i wouldn't fall in love with the position as the meetings on the weekend are sure to slow things down later in the afternoon.

North America: Not much on the radar besides the Canadian CPI data. It's a good directional release to finish the week off and takes on greater importance now the BOC has signalled they may need to withdrawal some stimulus.
                                         

Key Events – Release: (times are gmt)

08.00 EUR – German Ifo Business Climate

12.30 CAD – CPI

Quote of the day: "Better late than never – but better still: never late."