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GBP: The final GDP data. After yesterday’s US release, the market may be a little more sensitive to revisions, although for the UK the talk is that we’re more likely to some upward revisions to previous quarters. Update: YoY GDP and current account disappointed – GBP/USD loses 1.53.

EUR:  German labour market data, together with business, consumer and industrial confidence data for the Eurozone are the main points of interest. None are a major risk, but if we do see softer numbers across the board, expectations of further easing in the summer from the ECB are likely to grow and weigh on the single currency.

More:  Forex Analysis: EUR/USD Drops to Key 1.3000 Support

Idea of the Day

For commodities, this has been a pretty tough quarter. Bloomberg tells us that gold is lining up for its worst quarterly performance since at least 1920, down nearly 25%.   Silver had lost a third of its value.   But this is not simply a story about the Fed. Gold was already falling before there was serious talk of the Fed ‘tapering’ bond purchases.

Already our measure of global real interest rates (the return from bonds over and above inflation) was rising early April, with this having shown a strong negative correlation with gold over the longer-term.   The gains of recent years have hidden investors from the fact that gold is a risky asset offering no income stream, so we’re seeing a reality check, one which is likely to continue so long as real interest rates keep moving higher.

Latest FX News

JPY: We’ve had relative stability on USDJPY so far this week.   The market is waiting for tomorrow’s inflation and sales data.   The weekly portfolio data showed Japanese investors as net sellers of overseas bonds and equities for the 6th consecutive week.   Key support sits at 97.59 on USDJPY.

AUD:  The change of leadership at the ruling labour party had little impact on the Aussie, with the election looming along with a decent chance of defeat. The Aussie has so far risen every day for the past week, but this has all the signs of a recovery from oversold conditions, rather than the start of a more meaningful turnaround.

GBP:  The spending review was all about numbers which the market did not really care about, given that the top line spending numbers were announced back in the March budget.   Sterling was softer through Wednesday, GBPUSD support coming in at 1.5308 (100 day moving average).