GDP Reports & Retail Sales

Yesterday’s broad markets proved cautious as many of the currencies and equities traded sideways. The USD stayed on the stronger side of its ‘weaker’ range versus the EUR and traded almost motionless versus the GBP on Monday. The Americans did not publish any major data yesterday, but today Retail Sales numbers will be brought forth. The Core Retail Sales figure is anticipated to rise 0.6%. The U.S. will also be releasing the Empire State Manufacturing Index reading and it is expected to have an outcome of 14.7. Not to be outdone the Europeans will have an onslaught of important economic data also today. The German and French Preliminary GDP’s will be presented. The German report carries an estimated gain of 0.5%, while the French are forecasting a gain of 0.6%. Also the German ZEW Economic Sentiment reading is on the schedule and is anticipated to improve to 20.1.

Investors not only have a lot of data to consider today, but there are other risk events unfolding which could cause a shift of sentiment or two. E.U. officials are claiming from Brussels that they have achieved an agreement on boosting the funding for its Sovereign Debt crisis, but have failed to offer ‘the fine print’. The German bourse and the American NYSE are in discussions about a possible merger depending on who you talk to. And not unimportantly, the political upheaval in the Middle East has moved on to other countries and this could cause nervousness among commodity traders. Taking that into consideration, Crude Oil has been trading weaker the past couple of sessions and Gold has been fairly stable and is trading near 1365.00 USD an ounce.

The U.K. will be busy as well today with plenty of inflation data and reports coming forth. Inflation remains a critical concern in the U.K. and the Bank of England may be put to the test if pricing continues to prove that it is ramping up while the overall economy shows that it still under pressure to grow. The Sterling has reacted rather well in trading the past month as it traded under a EUR centric mode taking into consideration all of the talk surrounding the debt crisis. However, the inflation data from the U.K. could be a spark and actually ignite the possibility for divergence between the GBP and EUR. The Sterling has maintained a fairly stable value against the USD the past month and traders may be tempted to test its waters today if the inflation news does not leave the BoE in a comfortable position.

The JPY and AUD both traded in rather tight channels on Monday. The JPY managed to shrug off of lackluster GDP number and the Bank of Japan has even reiterated its position that the economy will improve. That being said the JPY is still within the stronger parts of its range versus the USD, but it does bear watching. The JPY has been a classic range trade for over a year. The AUD found a consolidated track yesterday and remains near its highs, albeit slightly below its greatest values. Gold has picked up a bit of steam the past week and has been stubbornly trading around the 1363.00 plus window.

There is a whirlwind of data today that could surprise investors and have an effect on the broad markets. Monday’s fairly quiet trading was a by-product of a cautious approach. The question is if investors and traders have positioned themselves for any shocks to the system. GDP numbers from the U.K. did not met expectations the past month and it remains to be seen if the Germans can meet their anticipated numbers today. Retail Sales from the States will also be of interest to many market participants who want to see if the American consumers are spending more freely. It should be an interesting day of trading.