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Forex Flash: Korean Q1 GDP estimate due tomorrow - DBS Group

FXstreet.com (Barcelona) - DBS Group analysts note that the preliminary estimate of the first quarter GDP is due tomorrow.

They note that growth is projected to rise to 3.2% QoQ saar from 1.3% in 4Q12. Exports and investment should have both improved on the QoQ basis. Further, Consumption growth may have slowed on the other hand, due to cold weather that temporarily dampened outdoor activities and expiration of the fiscal stimulus measures rolled out in 2H12 (such as consumption tax cuts on automobiles and electronics).

The add that downside risks to the export outlook have increased recently, due to budget spending cuts in the US and a slower-than-expected economic recovery in China. That said, they are not particularly concerned about the relative performance of Korea’s exports, as the won remains far from overvalued and the non-price competitiveness of Korean exports is strong. Meanwhile, they finish by noting that domestic demand is expected to continue to pick up in the next several quarters, thanks to the government’s supplementary budget (new spending of KRW 7.3trn,0.6% GDP), and credit easing by the central bank.

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The yellow metal has rallied off the 1422 level Wednesday, building on an earlier advance and taking gold to session highs at the 1432 mark. However during US trading, the price of gold has eased slightly in these minutes to trade at resistance at USD $1428.30 per oz. Gold maintains the structure of the bullish correctional wave, as price rebounded and attempting to settle above 1428.00 resistance, invalidating a previous bearish outlook. Patience in the retest of the 1428 level could lend credence to a rise higher.
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Forex Flash: ECB may reduce haircuts on collateral in June – TD Securities

TD Securities analysts expect the ECB to cut its refi rate by 25 bp (55-60% chances) in May, but the June decision will likely remain data dependent: “If commodity prices remain where they are and the survey’s and hard data disappoint further, it would be likely we would have yet another downward revision to staff forecasts in June”, wrote analyst Jacqui Douglas, expecting a further cut in the refi rate, narrowing the corridor to below its crisis lows (it was 50bps in either direction of the refi rate for a period in 08-09), or even negative deposit rates.
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