Risk off ahead of EU GDP

Asian equities are trading lower following on from the late selloff in the US session as the Japanese Nikkei leads the way lower. This is despite a robust Q1 GDP reading that showed the Japanese economy grew at 5.9% annualised versus the forecast of 4.2%. This shows the fast paced growth in three years, although many suspect this will be sustained in Q2 following the sales tax hike in April.

There has been very little bounce in the euro despite comments from Bundesbank’s, Weidmann – who said the German Central Bank had not agreed to any policy action despite media reports on Tuesday that they were willing to support further stimulus actions from the ECB if the inflation predictions were revised lower once again.

Sterling continues to trade lower as the US dollar catches a bid across the board in early European trading and the single currency threatens the April lows against the greenback at 1.3672.

The BoE quarterly inflation report dampened media speculation of a 2014 rate hike in the UK as Mark Carney continued to stick to what seems to be the global central bank mandate of sighting slack in the economy – with inflation benign – allowing rates to remain lower for longer. Broadbent then added that rate increases may be gentler than seen in the past and rates will not rise until the economy is ready.

Sterling has traded heavily this week but I feel this has lot to do with long positioning as many speculate on the currency implications on a Pfizer takeover of AstraZeneca.

This morning’s data focus will be the Q1 GDP release from Europe as the US session brings us CPI and industrial production along with Empire state manufacturing survey and Philadelphia Federal outlook.

EUR/USD

Supports 1.3675-1.3625-1.3580 | Resistance 1.3750-1.3780-1.3830

USD/JPY

Supports 101.75-101.40-101.15  | Resistance 102.30-102.30-103.00

GBP/USD

Supports 1.6720-1.6650-1.6580 | Resistance 1.6800-1.6850-1.6880