Accelerating inflation in China, better than forecasted JP Morgan Chase results and Obama’s announcement of a reduction of a deficit in the U.S. (4 trillion dollars in the next 12 years) – those are the most important information from financial markets at the moment.

Inflation in China is growing

Inflation is growing not only in Europe but also in China. In March, according to unofficial sources quoted by Chinese media, CPI inflation accelerated to 5,3-5,4% yoy from 4.9% yoy. It is slightly above the market consensus, which stands at 5.2% yoy. This is the highest level since July 2008. It is another argument for tightening monetary policy in China. The People's Bank of China recently raised interest rates by 25 basis points. In the near future we may expect the next increase of the interest rates.

JP Morgan Chase results

JPMorgan Chase in the first quarter of 2011 earned $ 5.6 billion. In terms of earnings per share, it is $ 1.28,  clearly above the market forecast of $ 1.16. JPMorgan Chase revenues in the first three months of this year amounted to $ 25.79 billion, and also were higher than expected ($ 25.6 billion). Today, Google will publish quarterly reports. It will take place after the session on Wall Street. It is expected that the Internet giant earned $ 8.13 per share, with revenues of $ 6.32 billion.

Beige Book and Obama’s speech

Beige Book, which reported a better situation in the U.S. economy, as well as the announcement of a reduction in the deficit of $ 4 trillion over the next 12 years, were both positive information. However, that was not enough to reverse the upward trend in the Eurodollar market. That situation is still connected with the possible further ECB’s monetary movements. Only the fear of increase of interest rates in the U.S. will be able to change the trend on the EURUSD.

Thursday’s calendar

In Thursday's calendar there are only two important publications: at 14.30 CET (8.30 ET) weekly data on applications for unemployment and PPI in the U.S.. It is estimated that in the last week the number of applications has fallen by two thousand to 380 thousand. PPI in March is forecasted to accelerate by 1.1% mom and 6.2% yoy. Tonight China will also publish a series of macroeconomic reports (the GDP growth rate for the first quarter, CPI and PPI).        

Pawel Kordala

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