• NIESR estimates UK economy shrank 1.8% in February
• German PPI (Jan) -1.2%, +2.0% y/y (vs median forecasts of -0.1% and +3.4% respectively) Weaker than expected inflationary pressures will bolster hopes of early ECB rate cut.
• Spains’ Economy Minister Solbes says he does not want to step down. Media speculation he could leave job in April cabinet reshuffle.
• UK trade deficit widens in January to -£7.745 bln from £7.232 bln in December (vs median forecasts of -£7.5 bln) While exports to EU countries rose nearly 6%, they plummeted nearly 16% to non-EU countries
• German January manufacturing orders fell -8.0% m/m, December revised down to -7.6% (much worse than median forecast of -2.0%)
• USD opened in Europe firmer, bolstered by safe haven flows in the wake of weak Chinese trade data. However USD came under pressure as S&P futures headed higher. Citibank and Bank of America shares doing well, bolstered by Obama administrations’ plan to use capital injections as an incentive to get banks to sell distressed securities to investors. BIS was seen buying EUR/GBP and could well have been in EUR/USD, but we didn’t get any confirmation of that. Sterling largely managed to survive the weaker than expected trade report. Swissy remains weak, not helped by caution ahead of tomorrows SNB rate decision and eroding safe haven flows. Rates widely expected to be trimmed 25bps, but wariness of possible comments regarding quantitative ease/intervention.