German and UK trade balances, UK output

Otmane El Rhazi : Today’s data calendar is light. After the European Central Bank’s meeting yesterday, which promised policy action in June (if still warranted), the next important event will be euro area’s April consumer price index on Thursday, May 15. Stock markets are struggling at important resistance levels and the EURUSD posted a possible reversal day, so technical trading and the few European data releases should drive the day.

As Portugal is about to exit its bailout programme, there might be some interest in possible credit rating changes today by S&P (BB, negative) and Moody’s (negative, Baa3). At 10:00 GMT, the European Central Bank announces the 3-year LTRO repayments, and large repayments could be taken as a sign of decreasing liquidity.

Germany March Current Account, Trade Balance (06:00 GMT)The trade surplus is expected to show an increase to 16.6 billion euros from previous month’s 15.7 billion. The surplus had recently been trending down for several months, due to the slow patch in the global economy, but should now be picking up steam. As trade balance is a large part of the current account, and according to the EU process of dealing with macroeconomic imbalances, Germany is in violation of the six percent current account surplus maximum limit.

In fact, Germany has been in violation of the limit since 2007, but so far has not received any sanctions from the European Commission. The German government has promised to do something about the problem, but so far not much has been done. In essence, Germany is not adhering to the commonly agreed checks and balances, and neither is Brussels. Should the Germany’s trade surplus begin to balloon again, it will become much harder to pretend that there is no elephant in the room. See Reuters, Open Europe for more.

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