The choppy US equity session yesterday, ultimately ending with modest losses as the tech sector remained under pressure, has been shrugged off in Asia and Europe, where modest gains have been seen. The dollar is little changed after yesterday’s gains, and bonds are mostly firmer. 

With the calendar effect and the approaching Easter holiday, trading enthusiasm is fading. There are several developments to note.  In terms of economic data, Japan reported softer than expected February retail sales (0.4% vs. 0.6%). Japan reports employment figures, CPI, and industrial production figures tomorrow, ahead of the Tankan Survey to the new week. 

In Europe, both Germany and the UK released data. In Germany, the states reported March inflation figures, and the federal government reported employment data. There is a risk that preliminary March that will be reported shortly will be a bit softer than the 1.6% rate the median expects. Although details are scarce, the core rate may have firmed. Separately, Germany reported 19k decline in the unemployment queues and the unemployment rate fell to a new record low of 5.3%.  

The UK’s data dump included Nationwide house price index (softer than expected 2.1% year-over-year), slightly stronger consumer credit and mortgage lending, a smaller Q4 current account shortfall (-GBP18.4 bln vs expectations of a GBP24.0 bln deficit), and left Q4 GDP unchanged at 0.4% (1.4% year-over-year). There are no policy implications and the market expects the BOE to hike rates in May. Sterling peaked on Monday near $1.4245. It is lower today for the third session, its longest losing streak this month. A number of technical levels can be found in the $1.3980-$1.4040 band. Sterling has entered this area, but the intraday momentum studies suggest that it may recover. There is a GBP843 mln option struck at $1.40 that expires today and GBP777 mln at $1.41.

There are also two flow stories to note. First, are a rash of mergers and acquisitions, which the Financial Times estimates to be more than $1.2 trillion here in Q1, and $50 bln yesterday alone. Today there are reports suggesting Softbank will take a stake in Swiss Re, and Nissan and Renault’s alliance and cross-shareholdings may turn into a full merger.  

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