Current Sentiment:
The Asia-Pacific session saw the eagerly awaited Consumer Price Index from Australia, which missed estimates across all figures by a wide margin. Trimmed Mean CPI printed at 1.7% y/y for Q1, below the 2.0% expected. For the quarter, Trimmed Mean CPI rose only 0.2% versus expectations of 0.5%. Headline CPI printed 1.3% y/y versus expectation of 1.8%. As discussed earlier in the week, this data plays directly into the RBA's monetary policy decisions and this miss has greatly increased chances of an RBA cut at the May 3 meeting, with probabilities jumping to nearly 50% after the release, from close to 10% prior. The last 10 months of RBA statements have clearly outlined the preparedness of the RBA to cut rates if inflation dips. The AUD will likely remain pressured heading into the May 3 meeting.

The main data release during today's London session was preliminary GDP data from the UK. GDP q/q printed in line with expectations at 0.4% however GDP y/y beat expectations at 2.1% vs expectations of 2.0%. The slowdown of GDP q/q from Q4 2015's 0.6% is largely being associated with the slowdown in China, weakness in commodity prices, and financial market volatility seen at the turn of the year, however concerns of the UK's services sector slowing are starting to increase.

Coming up in the New York session will be this week's crude oil inventories, along with the latest rate decisions and statements from both the FOMC and the RBNZ, we will also see the latests monetary policy decisions from the BoJ in the following Asia-Pacific session.

Trade Call:
Our trade call for the London session was to trade a deviation on UK GDP. Although GDP y/y printed slightly above expectations, all readings were within the range of expectations and therefore there was no high conviction trading opportunity.

*New updates to the fundamental section will be left in bold for 24 hours*

USD: CPI for March slightly missed estimates with Core dropping to 2.2% y/y from a prior of 2.3% and for the month, missing estimates at 0.1% versus 0.2% expected. Headline inflation also dropped from prior and missed estimates at 0.9% y/y. Employment figures for March were solid with 215,000 jobs added, a rise of 0.3% in Average Hourly Earnings, and an increase in Participation Rate to 63.0%. Yellen's speech on March 29 was dovish; she stressed caution in raising rates in the context of global risks and lower inflation expectations, this followed a dovish FOMC Statement the week prior.

EUR: A bearish currency fundamentally, however currently trading neutral following upside from Draghi's comments at the March meeting. CPI for March came in as expected for the headline at -0.1% y/y, but beat estimates for the core figure at 1.0% vs expectations of 0.9% and prior of 0.8%. On March 10, the ECB cut all three key interest rates and an increased QE by €20bn per month.

GBP: Fundamentally a slightly bullish currency, however market expectations regarding the UK's EU referendum will remain the primary driver of price action.Preliminary GDP for Q1 printed at 0.4% q/q as expected, however GDP y/y slightly beat expectations at 2.1% vs 2.0% expected. Average Weekly Earnings for February increased by 1.8%, below expectations of 2.3%, Claimant Count Change also missed expectations, increasing by 6,700 vs an expected decrease of 11,300. For the month of March, Core CPI m/m printed at 0.6%, double the expected 0.3%, and core y/y printed at 1.5% above expectations of 1.3%. Headline CPI also beat market expectations at 0.4% m/m and 0.5% y/y.

AUD: CPI for Q1 missed by a wide margin with Trimmed Mean CPI printing at 1.7% y/y, below expectation of 2.0%. This is well below the RBA's 2% target for inflation and hence greatly increases the chances of a cut at the May 3 meeting. This makes the AUD a bearish currency for now. Employment data for March beat estimates at 26.1K vs expected 18.0K for the Employment Change, whilst the Unemployment rate fell to 5.7% vs expectations of 5.9%.

NZD: Fundamentally a weak currency given the RBNZ's easing bias, however currently seeing upside for the same reasons as the AUD. CPI for Q1 slightly beat estimates at 0.2% q/q versus expectations of 0.1%. Year-over-year CPI matched estimates at 0.4%, well below the RBNZ's target mid-point of 2%. Excluding petrol prices, CPI rose 0.7% y/y.

CAD:  A neutral to weakly-bullish currency, with sentiment in lock-step with WTI. Core CPI for the month of March rose 0.7% versus an expectation of 0.3%. This puts year-over-year core inflation at 2.1%. Retail Sales Excluding Automobiles rose 0.2% for February, well above the expected half-percent decline. Solid data from Canada during April has erased any expectation of easing this year, for now.

JPY: Fundamentally a weak currency with chances of further easing. Tokyo CPI Ex-Food & Energy for March was at 0.6% y/y, above expectations of 0.5%. The monthly rise was 0.5%. Nationwide CPI Ex-Food & Energy for February rose 0.8% y/y, above expectations of 0.6%. The BoJ measure remained steady at 1.1% y/y. Daily movements in yen are largely a function of risk sentiment.

CHF: Fundamentally a weak currency, highly correlated with moves in EUR. The franc is fundamentally a weak currency given the SNB's negative interest rates, however it can suddenly rally on safe-haven flows. The SNB regularly recite that the franc is overvalued and they are prepared to intervene to weaken the currency. The franc's direction is difficult to predict due to regular intervention by the SNB.

Technicals:
We will be monitoring levels of support and resistance in unison with any impactful news and the underlying fundamentals in order to find a high probability trade. Support and resistance includes previous highs and lows (horizontal s/r), trendlines, moving averages, fibonacci retracements, daily pivot levels and round numbers. These levels of support and resistance are most effective when there are several of them converging at the same area (confluence).