The UK CBI retail sales index slumped to -35 for April from 9 the previous month and below consensus forecasts of -3 and the first negative reading for 13 months. Retailers also expect sales to decline in May, although at a slower rate as overall consumer confidence remained vulnerable. The survey reinforced concerns over the UK consumer spending outlook and overall confidence in Sterling also remained very fragile. Month-end position adjustment will have a significant impact, especially with a UK market holiday on Monday and Bank of England policy decision next week.
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German consumer confidence dipped sharply to -26.5 for May from -15.7 previously which was below consensus forecasts of -16.0 and the weakest reading on record. Confidence in the Euro-zone outlook continued to deteriorate during Wednesday with a particular focus on the energy sector. Following Russia’s move to stop gas shipments to Poland and Bulgaria, there were fears over further disruption to supplies while political pressure countries such as Germany also continued to increase. Fears over an escalation of the Ukraine conflict also undermined confidence in the Euro. ECB President Lagarde stated that the central bank is firm in its commitment to meeting the price target. The German inflation data will be released on Thursday with the Euro-zone data due on Friday and markets will be watching the data closely given the importance for ECB policy expectations.
Key Data
13.00 German Harmonised Index of Consumer Prices (YoY) (Apr) Exp. 7.6% Prev. 7.6%
The US goods trade deficit widened to a record $125.3bn for March from $106.4bn the previous month. Exports increased 7.2% on the month, but imports surged 11.5%. The widening trade deficit will tend to undermine GDP growth for the first quarter with the risk that there will be a further downgrading of expectations which are currently centred on 1.1%. There has been some speculation over a negative figure which would tend to trigger fresh stagflation concerns.
Key Data
13.30 Gross Domestic Product Annualised (Q1) Exp. 1.1% Prev. 6.9%