Surprise German GDP boosts markets

World markets reversed their slide this morning after Europe narrowly avoided a recession with a German GDP report that came in slightly above expectations.

U.S. traders are now looking towards retail and manufacturing data at 8:30 a.m. ET for further direction. The S&P 500 June futures are up 7.25 points to 1341.50, slightly above yesterday's intraday support of 1335. The Nasdaq 100 June contracts are also higher by 16.75 points to 2601.75, reclaiming the 2600 technical level.

European indexes are mixed, with the German DAX higher by 0.16 percent and the Euro Stoxx 50 up 0.28 percent while the U.K. FTSE 100 is lower by 0.10 percent. Because of Germany's surprise growth, euro/dollar futures are slightly higher against the greenback, gaining 0.04 percent to 1.2849 as of this writing.

Commodity markets, specifically gold and crude oil, are unchanged from yesterday's levels, though copper is down by 0.48 percent to 3.536. Despite Asian indexes showing strength, copper failed to reverse its steep slide from yesterday, which saw the contract fall more than 1.9 percent. Because of copper's weakness traders should keep a close eye on oil and gold as further weakness could come into those contracts today.

Hong Kong's Hang Seng rose 0.81 percent, while Japan's Nikkei 225 fell 0.81 percent. Asian markets are still concerned over declining foreign investment on the back China's slowest growth in 13 years.

In stock-specific news, daily deal site Groupon is surging more than 25 percent after beating earnings estimates after yesterday's close.

U.S. bank stocks are marginally higher after Germany's GDP number. JP Morgan is up 1.3 percent this morning.

More From optionMONSTER

View the original article here

Summary Box: Markets rein in hope for UK stimulus

LOWERING EXPECTATIONS: The markets reined in their hope for further economic stimulus from the Bank of England after minutes from the central bank's last rate-setting meeting showed its monetary policy committee almost unanimously decided against changing course.

THE NUMBERS: In response, the pound rose from about $1.594 to just under $1.60.

LONE SUPPORTER: David Miles was the only committee member to advocate that the Bank of England free up money in the British economy by buying up bonds and other assets from banks. He voted with the other eight members to keep the main interest rate at a record low 0.5 percent.

View the original article here

Currency Markets to Look Past European Data, Focus on Fed Chatter

Currency markets are likely to look past European economic data to focus on Fed officials’ commentary as lackluster US jobs growth stokes wishful QE3 speculation. Talking Points

Swiss Jobs, German Trade Data Unlikely to Prove Market-Moving Fed Speaking Calendar in Focus as QE3 Hopes Continue to Circulate Aussie, NZ Dollars Sold as China Unexpectedly Posts Trade Surplus Yen Erases Losses After Bank of Japan Opts Not to Expand Stimulus Markets are likely to look past the European data docket to focus on the Federal Reserve speaking calendar as the QE3 debate continues to dominate price action in the aftermath of Friday’s disappointing US jobs report. Comments perceived as increasing the probability of further stimulus are likely to weigh on the US Dollar (ticker: USDollar) while those reinforcing the status quo will probably produce the opposite effect.

Dallas Fed President Fisher, Atlanta Fed President Lockhart and Minneapolis Fed President Kocherlakota are scheduled to come across the wires. Although only Lockhart is currently on the rate-setting FOMC committee, Kocherlakota and Fisher were voting members last year and ought to be intimately familiar with the arguments in favor of and against additional easing. This means their remarks may prove market-moving in the absence of other catalysts.

The economic calendar is relatively quiet in European hours, with Swiss Unemployment and German Current Account numbers amounting to the only bits of high-profile event risk. The former reading is expected to see the jobless rate drop to 3.3 percent in March, but the nominal pullback is unlikely to carry significant implications for SNB monetary policy, where the focus remains on fighting deflation, and so will probably have at best a limited impact on the Swiss Franc.

Meanwhile, the most significant take-away from the latter outcome is likely to be the export growth gauge, where expectations call for a 1.2 percent decline. Nearly 39 percent of German cross-border sales are accounted for by other Eurozone countries, so weakness here may underscore the danger of economic slowdown in the periphery for the region’s core. While this may emerge as a headwind for the Euro in due time, one data point is unlikely to stir significant fireworks from the Euro. Broadly speaking, monthly German export growth readings have been trending lower since mid-2010.

The Australian and New Zealand Dollars came under heavy selling pressure after Chinese Trade Balance figures unexpectedly showed a $5.35 billion surplus in March compared with expectations for a -$3.15 billion deficit. The result seemed to further dent PBOC stimulus expectations already on the wane after yesterday’s CPI result. The Japanese Yen rose after the Bank of Japan kept interest rates unchanged at 0.10 percent and held off on expanding its non-standard easing measures (asset purchase fund, credit-loan program, bond purchases), erasing earlier losses. The bank added that the decision was unanimous and even specified that none of its officials proposed expanding accommodative policies.

Asia Session: What Happened

Lloyds Employment Confidence (MAR)

RICS House Price Balance (MAR)

AiG Performance of Construction Index (MAR)

ANZ Job Advertisements (MoM) (MAR)

Euro Session: What to Expect

German Exports s.a. (MoM) (FEB)

German Imports s.a. (MoM) (FEB)

German Current Account (€) (FEB)

German Trade Balance (€) (FEB)

Machine Tool Orders (YoY) (MAR P)

French Industrial Production (MoM) (FEB)

French Industrial Production (YoY) (FEB)

French Manufacturing Production (MoM) (FEB)

French Manufacturing Production (YoY) (FEB)

DCLG UK House Prices (YoY) (FEB)

Euro-Zone Sentix Investor Confidence (APR)

Critical Levels

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

To be added to Ilya's e-mail distribution list, send a note with subject line "Distribution List" to ispivak@dailyfx.com

DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.

View the original article here

New York Fed's head of markets to leave after Twist

By Richard Leong

NEW YORK (Reuters) - Brian Sack, who oversees the Federal Reserve's dealings with Wall Street and was seen as a "rising star" within the central bank, will resign from his post later this year, the New York Fed said on Thursday.

The unexpected resignation by Sack, 41, will become effective in September but he will be placed on leave after June 29. This coincides with the end of the Fed's latest program to boost the economy, which he has been overseeing.

Sack has been the head of the New York Fed's markets group since June 2009. His tenure includes the implementation of many of the central bank's emergency measures to stabilize the banking system and pull the U.S. economy out the worst recession since the Great Depression.

"He was a young guy. He seemed to be a bright guy, he seemed to be doing a good job. I was very much surprised by it," Michael Moran, chief economist at Daiwa Securities in New York said about the resignation.

Moran said he did not know Sack's motivation for leaving the post.

"I was wondering about that myself but had not heard anything. I would imagine it has been a tough job in the past three years, and he might just be a little tired," he said.

Sack will remain in his current position as head of the Markets Group and Manager of the System Open Market Account (SOMA) until June 29, 2012, to help ensure a smooth transition, the New York Fed said in a statement.

Sack will then be placed on leave until September 14, during which time he will have limited contact with the New York Fed and no access to the bank's information, including Federal Open Market Committee and supervisory materials, the New York Fed said, adding it has started the search process for a replacement.

The end of June marks the conclusion of the Fed's $400 billion program of selling shorter dated Treasury holdings and buying of longer dated debt.

The program, which markets have dubbed "Operation Twist," is aimed at lowering long-term borrowing costs to help end the country's prolonged housing slump.

Sack's departure is not likely to affect Fed policy.

A Fed spokesman said Sack's resignation was "entirely his own decision," and he has not lined up another job after he leaves the New York Fed.

Sack replaced William Dudley, the current president of the New York Fed.

"I don't think it will mean a lot for Fed policy. They pride themselves with having a deep bench and not being dependent on any single person," said Julia Coronado, chief North America economist at BNP Paribas in New York.

Currently, the key question for Fed policymakers and investors on Wall Street is whether more monetary stimulus is needed to keep the sluggish economic recovery from fizzling.

Sack oversaw much of the Fed's quantitative easing measures that have ballooned its balance sheet to $2.86 trillion through large-scale purchases of bonds.

Prior to joining the New York Fed, Sack was a vice president at Macroeconomic Advisers, an economic research firm based in Washington, where he conducted extensive analysis of the interactions between Fed policies, financial markets and the U.S. economy, according to the New York Fed's online biography on him.

Macroeconomic Advisers was co-founded by Laurence Meyer, who was a Fed governor from 1996 to 2002.

Before joining Macroeconomics Advisers in 2004, Sack was the head of the Monetary and Financial Markets Analysis section at the Fed's Board of Governors. His responsibilities in that role included preparing materials on financial market developments for the policy-setting FOMC and briefing board members about those developments.

BNP's Coronado, who knew Sack when they worked together at the Federal Reserve Board, said, "He was a rising star on the Board...He rose through the ranks very quickly."

(Additional reporting by Chris Reese; Editing by Diane Craft)

View the original article here