Article / 29 May 2015 at 7:03 GMT

Morning Markets: Dollar train facing Q1 revision risk

Former managing editor, TradingFloor.com / Saxo Bank
Denmark

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Watchlist (See more from TradingFloor.com's finance calendar)

  • German retail trade (0600 GMT, already published)
  • French PPI (0645 GMT, already published)
  • Spain Flash estimate CPI (0730 GMT)
  • Sweden GDP (0730 GMT)
  • Italian GDP (0800 GMT)
  • Greece Provisional GDP (0900 GMT)
  • Portuguese GDP (1000 GMT)
  • US second estimate GDP (1230 GMT)
  • US University of Michigan survey (1400 GMT)

USD bulls have by and large had it all their own way this week but there could be a nasty sting in the tail when a revision of US GDP data for the first quarter is expected to send it into negative territory. How impactful that might be for the dollar is debatable given the stronger data emerging stateside this week, but expect a bit of choppiness if the print is as nasty as expected.

EURUSD bulls meanwhile will be heartened by German retail trade figures out at 0600 GMT this morning which posted a monthly rise of 1.7% versus 1% expected ahead of a raft of data across Europe. Greece is one of those stepping up to the plate today but given that it assumed something of a basket-case proposition for euro scenarios some time ago, it would only be extremely negative news there that would likely impact markets. Spanish, French, Italian and Portuguese data might be more telling for the relative strengths of the Eurozone.

Chinese stocks went on a bit of a rollercoaster ride after the Shanghai Composite Index initially extended its 6.5% plunge Wednesday by a further 4.1% in the pre-lunch Asian session before swiftly clawing back all those intraday losses and heading back up again. Nerves are nevertheless frayed by Wednesday's dizzying fall and investors will be keenly watching at the outset of next week to see whether the fastest rising index in the world has hit a wall.

The steady-as-she goes Nikkei 225 was rather serene in comparison sailing to a 15-year high on a 0.5% rise that confirmed its 11th day in-a-row of climbs.

Market signals

Asian session

  • Shanghai Composite takes rollercoaster ride Thursday after previous day's 6.5% fall
  • Composite fell 4.1% in early trading before later recovering its losses to turn green
  • Sales of new homes in Australia rose for a fourth straight month by 0.6% in April
  • AS&P/SX200 climbs to three-week high on expectations of RBA rate move next week
  • Crude oil futures rose about 1% on Friday after US inventories fell for a fourth week
  • Japan's core consumer prices rose 0.3% in April from a year earlier 
  • Household spending in Japan fell 1.3% in April from a year earlier, well below forecast

Forex ahead

  • USDJPY retraces back below 124.00 handle ahead of US GDP revision figure
  • Support in USDJPY now at 122.00 after coming back down from 124.46 high.
  • NZDUSD continues on the backfoot to hit 2015 lows around 0.7120.
  • Move towards 0.7000 on the cards if kiwi/dollar finishes below 0.7200.
  • AUDUSD retrurns to upside but unable to break above 0.76780
  • NOK could go weaker if Norway unemployment rate hits 2.9%
  • EURNOK vulnerable if Norway data disappoints

From the Floor

Don't look back. "How firmly do people want to have their view on the rearview mirror on this US Q1 revision or are they looking ahead," says Hardy.

Feed me. "Refinery demand is at record highs removing some of the US supply glut and boosting WTI," says Hansen.

Get all the latest from Saxo Bank's trading floors in From the Floor, within the hour.

In opinion

No more shockers
The Germans were not expecting any shocks from retail sales in April after March's downturn, but in the US there's no clear signs that Q2 has shrugged off Q1 doldrums, says Juhani Huopainen

Taking the rise
Alan Collins has a weekend-spanning view on EURJPY that could take the pair up above 136.50 if it continue its net upside run of the last three days. [trade view]

Sun drenched result
While JinkoSolar's downstream solar panel business felt some constraints, it has posted a strong result says Neil Flynn, and expects strong demand from China to begin shortly.

This ain't no rally
Ole Hansen doesn't anticipate WTI crude heading north of $65/barrel unless we get a game-changing geopolitical event that sends the oil bears scurrying for cover. [video]

When it's down....
Data storage company SanDisk has had a difficult six months sending the stock into a downward spiral, but the time could now be ripe for a fresh look, writes Serge Berger [trade view]

Win some, lose some
It's very important for traders not to let success go to their heads as it can lead to sloppy trading decisions that prove costly, warns Gerald Ashley. Learning how to cope with success is key.

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The US GDP revisions for Q1 might give USD bulls pause for thought as a negative downward adjustment is expected to show up a surprisingly dark three months stateside. Photo: iStock

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JulieDeiy JulieDeiy
This comment has been redacted
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Martin O'Rourke Martin O'Rourke
The US Q1 GDP revision has come in at minus 0.7%, significantly worse than the expected revision down to minus 0.1%. EURUSD is trading currently at 1.0963 at 1318 GMT, and USDJPY is at 124.10, so that would suggest the dollar market has taken this one in its stride.
4y
Juhani Huopainen Juhani Huopainen
A decimal error there. The expectation for revised Q1 GDP was around negative 0.9 to negative one percent, not negative 0.1 percent.

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