Markets likely to look past Q1 US GDP rebound
There is little sense of panic following the Bank of Japan outlook report where the median CPI forecast for FY15 (end March 2016) was +1.9%, perhaps a touch below some had expected. USDJPY is a little lower at 98.65 vs. the 99.20 close yesterday, but most of the correction came ahead of the release of the Outlook report. We think the market will choose to look through today’s US advanced Q1 GDP data (13:30 BST). The consensus is for 3% annualised (our economists are a little lower at 2.7%). Accordingly, while the majors could remain constrained today (AUDUSD under 1.0300, EURUSD below 1.3100), this could change into next week as the market looks towards Friday’s US non-farm payrolls report and ISM releases. Our economists forecast growth to slow to 1% annualised in Q2. This should force investors to re-assess their Q1 cyclical long USD position.
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BNP Paribas