• German March prelim retail sales -1.0% m/m, -1.5% y/y. Weaker than expected
  • Swedish PMI 38.8 in April vs 36.7 in March
  • Swiss PMI 34.7 in April vs 32.6 in March
  • Czech manufacturing PMI 38.6 in April from 34.0 in March
  • Euro zone manufacturing PMI April (final) 36.2 vs flash 35.9, 33.4 in March) 6 month high
  • Italy March PPI -0.6% m/m, -3.9% y/y
  • Sentix euro zone index -34.3 in May vs -35.3 in April. Strongest level since last October
  • Spain April car sales fall -45.6% y/y vs -38.7% in March
  • European Commission forecasts: Sees Euro zone economy contracting -4.0% in 2009, modest +0.1% growth in 2010. Revised down from January 19 forecasts of -1.9%, +0.4% respectively. Unemployment seen 9.9% in 2009, 11.5% in 2010
  • European Commission: Euro zone budget deficit to more than treble by 2010
  • China’s FinMin: China still faces “daunting challenges.”

The market appears to have a little risk on/risk off switch, which gets flicked on and off at the drop of a hat. When we arrived this morning it was certainly in the on position, but at some juncture got flicked to off.

Maybe we had just come too far, too fast, and needed to consolidate. The release of disappointing German retail sales will have added a note of caution, as did comments from the Chinese Finance Minister.

Xie Xuren, speaking at the annual meeting of the Asian Development Bank, warned that much still needs to be done in China, saying “The People’s Republic of China still faces daunting challenges such as a sharp decline in exports, over capacity in some industries, slow recovery in industrial growth, drop in economic returns, reduction in fiscal revenues and severe pressure on employment.” Quite a list.

Downwardly revised economic growth forecasts/increased budget deficit projections from the EU commission, and fairly downbeat comments from ECB’s Weber, will also have weighed on sentiment.

EUR/USD is down at 1.3260 from an early 1.3320, sell-stops just below 1.3300 accelerating the move lower.

Cable has given up close to 3/4’s of a cent, presently down at 1.4875.