London Session

What looked to have been an overreaction in risk aversion reversed in London trading as risk assets recovered most of their losses. European bourses were now down about -1.0% after sinking more than -2.5% in early trading. US stock futures have also reversed and are nearly back to flat after being deep in the red. Gold managed to hang on to gains and is more than $7 higher near 926/927. In sum, the price action across asset classes proved detrimental to the buck.

EUR/USD managed to add more than 70 pips towards the 1.3265/70 zone despite disappointing economic data. German retail sales sank -0.2% in February while the market was looking for a +0.3% result. This took the annual run-rate to a dismal -5.3% from -1.4%. Eurozone PMI manufacturing was revised lower to 33.9 from 34.0 in March while eurozone unemployment jumped to 8.5% from 8.3%.

Data was actually better in the UK as PMI manufacturing there jumped to 39.1 in March from 34.7 prior – the best result in four months. This helped GBP extend higher. Cable jumped nearly 90 pips back above the 1.44 level while EUR/GBP was a touch lower near 0.9210 despite the overall EUR strength.

Now we have a ton of important economic reports due up in the NY session. The ADP employment report kicks it off at 815am ET and is expected to show another massive -663K decline in private US payrolls. ISM manufacturing at 10am ET is actually forecast to improve to 36.0 from 35.8 prior while US auto sales are expected to nudge a touch higher to a still horrid 9.2 million unit run-rate in March. Look for worse than expected results to elicit some selling of risk and a reversal of the moves seen in the latter part of the London session.

Upcoming Economic Data Releases (NY Session) prior expected

4/1 12:15 GMT US ADP Employment Change MAR -697K -663K

4/1 14:00 GMT US ISM Manufacturing MAR 35.8 36.0

4/1 14:00 GMT US Pending Home Sales MoM FEB -7.70% 0.00%

4/1 14:00 GMT US ISM Prices Paid MAR 29 33.0

4/1 14:00 GMT US Construction Spending MoM FEB -3.30% -1.90%

4/1 14:30 GMT US DOE U.S. Crude Oil Inventories 27-Mar 3302K 3000K

4/1 14:30 GMT US DOE U.S. Gasoline Inventories 27-Mar -1144K -1500K

4/1 17:00 GMT US Fed's Pianalto Speaks in Columbus Ohio

4/1 US Total Vehicle Sales MAR 9.1M 9.2M

4/1 US Domestic Vehicle Sales MAR 6.4M 6.5M