As we come to the end of the first quarter of 2015 equity markets on both sides of the pond may have posted new record highs, but it is European markets led by the German DAX that have outperformed with the German benchmark posting its best quarterly gains in percentage terms since the last quarter of 1999. The gains in Europe have been helped by continued expectations of easy monetary policy from all over the globe as concerns about falling prices and weak economic growth keep central banks on the back foot, though US markets have struggled as concerns about Fed tightening have served to limit the upside. This quarter can best be characterised by unprecedented easing measures from over 20 global central banks, though some of the recent momentum of US markets has been tempered by concerns that US rates could well be set to rise this year, with the US dollar rising rapidly in expectation of just such an event. These expectations of a US summer rate rise have suffered a bit of a setback in recent weeks over concerns that the US economy could well be slowing down, despite what looks like a fairly positive labour market, with comments at the end of last week by Fed chief Janet Yellen reinforcing the growing perception that the Fed is becoming less sure about the timing of a rate rise than appeared to be the case at the beginning of the month. The ambiguity in her comments appear to reflect growing uncertainty and division on the part of Fed policymakers as to when rates might rise. Yesterday’s economic data did nothing to dispel the uncertainty surrounding the US economy, with better than expected housing and personal income data for February, offset by disappointing personal spending data, once again raising concerns as to why US consumers remain reluctant to loosen their purse strings. With the situation in Greece continuing to simmer away in the background investors appear remarkably relaxed about the lack of detail in yesterday’s reform list, with details of pension and labour market reform somewhat sketchy at best. With German Chancellor Angela Merkel insisting that Greece’s reform program needs to add up, it is still increasingly evident that it remains some way short of doing so, as the game of chicken that has been going on since February continues to play out. Today’s economic data turns back to the German economy which continues to be the pick of the bunch on Europe. In recent months the normally reticent German consumer has taken to opening their wallets, boosted by a lower euro, low unemployment and record consumer confidence numbers. Retail sales over the last few months have been notable for fairly consistent month on month gains, though this could come to a halt in February after four consecutive months of positive growth. A slide of 0.7% is expected, though unemployment is expected to fall further in March with the monthly rate remaining at 6.5%. This still remains one of the best rates in Europe in stark contrast to Italy’s rate which is expected to remain at an eye wateringly high level of 12.6% for the three months to February, and the wider EU rate which currently sits at 11.2%. Headline inflation in Europe is expected to improve slightly to -0.1%, from February’s -0.3%, though this is expected to be as a result of the recent rebound in oil prices. Core prices are expected to remain steady at 0.7%. In the UK, despite some concerns about falling prices the final Q4 GDP numbers are expected to show that the UK economy grew at a rate of 2.7% in 2014, and a quarterly rate of 0.5%, though we could see an upward revision, given last week’s upward revisions to previous months retail sales numbers. EURUSD – while the euro holds above the 1.0780/90 area the risk remains for a short squeeze back towards the highs last week at 1.1050. A move below 1.0780 could well see a decline back towards 1.0600. GBPUSD – yesterday’s break below 1.4800 saw the pound fall to the 1.4750 level before rebounding. This break lower opens up the risk of a move towards the lows at 1.4630. We need to push back above 1.4830 to argue for a return towards the 1.5000 level. EURGBP – last week’s bearish daily reversal keeps the pressure on the downside while below last week’s high at 0.7385. A sustained push below the 0.7280 level argues for a return towards 0.7200, with intraday resistance at 0.7340. Above 0.7400 argues for a move towards 0.7500. USDJPY – last week’s rebound of the 118.30 level needs to get back above the 120.60 level to suggest a retest of the previous highs at 122.00. The fact that we posted a daily hammer could well be constructive for a move higher to unfold. 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