From Marc to Market:
The election of Macron as French President has set off a bout of position adjustment that has seen the euro push back into the $1.0850-$1.0950 range that had confined activity for the two weeks between the first and second rounds of the French presidential election.
The euro fell a cent yesterday after briefly poking through $1.1020. Marginal new lows were scored in the European morning, Support is seen in the $1.0850-$1.0875 area. There are chunky option strikes that roll off today at $1.0900-$1.0910 (665 mln euros) and $1.0950 (657 mln euros).
Germany reported trade and industrial production figures for March and Italy reported retail sales. German industrial output fell 0.4% in March, which is nearly half the decline that many economists expected after a sharp 2.2% increase in February, which was subsequently revised to 1.8%. Net-net, the year-over-year figure was nearly steady at 1.9% rather than the revised 2.0% pace posted in February.
The German trade surplus, as a source of widespread criticism (EU, ECB, US) jumped by a quarter in March to 25.4 bln euros from 20.0 in February. Export growth slowed to 0.4% after a revised 0.9%. Imports, which had fallen 1.6% in February rose 2.4% in March, which was more than expected. The German current account jumped to a new record high of 30.2 bln euros (from 20.7 bln). The current account was flattered by what seems to be a seasonal increase in primary income (investment income) and a small deficit on secondary income (aid).
Germany reports the first estimate of Q1 GDP at the end of the week. The economy appears to have accelerated in Q1 to 0.6% from 0.4% in Q4 16. Over the past four, eight, and 12 quarters, the Germany economy has averaged 0.4% growth.
Italy's retail sales disappointed. They were flat in March rather than increase by 0.2% as economists expected. The contraction in February was shaved from 0.3% to 0.2%. Year-over-year, retail sales have fallen by 0.4%. Italy reports industrial output tomorrow and Q1 GDP early next week. With the French presidential election over, and Merkel's CDU finding better footing in state elections and national polls, the focus of angst in Europe turns to Italy, where parliamentary elections are due next year. The Five-Star Movement is polling well, and is, for all practical purposes running neck and neck with the PD, which recently saw Renzi re-elected leader....MORE