The overnight session was one of US$ weakness and $A strength, trades that gathered momentum early in the London session, a session marked by a big miss on US consumer confidence.  The Euro has tested 1.10, while the AUD/USD is up over 2% trading above 0.80 this morning, the Bloomberg US$ spot index off 0.59% and the Aussie higher on the crosses.  The US$ selling was underway before the consumer confidence report hit the screen but had another leg down in its wake.  Even a miss on UK GDP that printed at 0.3% for Q1 (against 0.5% expected) was a mere speed bump in US$ selling against sterling.  We also note that the Euro was not harmed by reports that Ireland was planning tax cuts and spending increases in its 2016 Budget, indications the Republic has turned the corner.  Reported overnight, Irish retail volumes (+9.2% y/y) and property prices (+16.8% y/y) surged in March.

There’s been lots of analysts’ soul searching why the Conference Board measure of consumer confidence did not move in step with modest rise in the UoM measure.  We would note that the Conference Board measure is often watched for what it says about US consumers’ perceptions of the job market.  On that score the “Jobs Plentiful Index” (Jobs plentiful-jobs hard to get net balance) worsened to -7.3 from -4.5, the lowest since December and not unlike overall confidence. Regionally, most broad multi-state survey areas in fact rose but the West Central region was fell 13 points, the region that includes Oklahoma and Texas, affected by the downturn in oil and gas.  The Dallas Fed Manufacturing index has also moved into contractionary territory this year.

In the wash up, the AUD is at the top of the FX leader board this morning, spot iron ore price up again yesterday by $0.79 to $59.88/t and higher on the crosses.  Gold and metal prices rose somewhat too, though the softness in the $US would explain a good deal of that.  China yesterday announced measures to support local government financing.

We head into tonight’s US GDP report and FOMC with the $US looking vulnerable to any growth weakness and signs that Fed might delay rate lift-off.

Coming up today/ tonight

NZ’s March trade report and the ANZ NZ Business Survey are out this morning.  The $424m monthly surplus we anticipate (versus $392m market median) is flattered by seasonality. The real story is the annual balance that we think will go further into deficit to $2.66b from weak dairy prices.  We are watching the ANZ business survey for any signs of weakness.

German regional CPIs are to be released early this evening ahead of the preliminary Germany CPI for April as well as the monthly EC Confidence Surveys for April.  The Business Climate Indicator is expected to ease to 0.2 from 0.23.

And then the focus hones in on the US, first with GDP and then tomorrow morning with the FOMC announcement, will be whether the headline Q1 US GDP growth is going to be friendly to the $US or not.  With the Atlanta Fed Nowcast of Q1 GDP sitting at just 0.1%, we’re a little surprised that analysts do not have a model that’s more aligned to this estimate.  The consensus for GDP is 1%.  Then it’ll be whether the detail matches the headline.

As for the FOMC, three things to watch for me.  1) How the statement characterises the economy and we’d expect some downgrade from “growth has moderated somewhat”; 2) how they describe the factors behind the slowing and the relative importance of the weather; 3) an update from March’s statement when they removed patient but said April was “unlikely”; will they say the same that about June?  That seems likely and an open book beyond then, the Fed totally dependent on the data flow and how temporary the slowdown is.

Overnight

$A tops the leader board overnight: Eurostoxx 600 -1.5%, Dax -1.9%, CAC -1.8%, FTSE -1.0%.  Dow +72 points to 18,110, +0.4%, S&P 500 +0.4%, Nasdaq +0.3%, VIX 12.41 -5.4%.  Mumbai -1.1%, Nikkei 225 -0.1% and ASX 200 +0.8%; ASX SPI futures this morning +0.2%.  US bond yields: 2s at 0.56% (4), 10s at 2.00% (+8).  WTI oil at $57.02 (+0.1%), Brent at $64.64 (-0.3%), Malaysian Tapis (yesterday) $65.10 (-0.2%).  Gold at $1211.60/oz (+0.7%). Base metals: LME copper +0.9%, nickel -0.8%, aluminium +2.0%. Iron ore $59.9/t +1.3% Chinese steel rebar futures -0.2%. Soft commodities spot futures: wheat +0.7%, sugar -1.2%, cotton +0.2%, coffee 1.1%.  Euro Dec 14 CO2 emissions at €7.39/t (2.8%). The AUD/USD’s range overnight 0.7866-0.8028; indicative range today 0.7975-0.8050; the AUD/USD is 0.8022 now

UK GDP (Q1) 0.3%/2.4% (L: 0.6%/3.0%; E: 0.6%/2.7%)

US Conference Board Consumer confidence (Apr) 95.2 (L: 101.3; E: 102.5); Richmond Fed Manufacturing (Apr) -3 (L: -8; E: -2); Case-Shiller 20 cities house prices (Feb) 0.93%/5.03% (L: 0.87%/4.6%; E: 0.7%/4.7%);

For full analysis, download report:

• Markets Today: 29 April 2015 (PDF, 330KB)

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