The absence of clear direction ahead of today’s Eurozone ECONFIN meeting and month/quarter-end continued to keep markets as a whole in a mixed directionless mood yesterday. The precious metals were no exception with complex overshadowed by negative technical indicators while dollar gains during US trade weighed on the metals; the metals traded down a net 1% before recovering to settle down 0.4%.

Despite data showing a higher number of initial US jobless claims yesterday the dollar firmed during US trade after data confirmed the US economy expanded by 3% last quarter while Eurozone jitters lingered in the background as mass strikes were seen in Spain in protest to further stringent austerity measures after last year’s budget failed to meet already tight targets. The dollar index was up 0.3% at its peak but reversed to settle down 0.1%; the euro settled down 0.1% against the dollar and 0.6% versus the yen. Reflecting the Eurozone concerns peripheral bond spread over the German bund widened; the German/Greek spread increased 85-bps, the Portuguese 40-bps and the Spanish 17bps. Equity sentiment across the region also weakened with the Stoxx 50 index closing down 1.7%, the S&P500 posted a more modest 0.1% decline while the Dow closed up 0.1%.

Equities have seen a mixed start this morning following broadly positive data and amid expectations ECOFIN officials will agree to bolster the regions fiscal firewall; at the time of writing the MSCI Asia Pacific Index was off 0.2% and the Nikkei 0.3%. WTI futures are in a steadier mood this morning after sliding 2.5% yesterday amid speculation governments will release strategic reserve to combat Iran supply related market tightness; May futures were up 0.5% at the time of writing. Expectations Eurozone officials will agree to up the regions fiscal footing has kept the single currency in positive territory with EUR/JPY up 0.1% and EUR/USD 0.5%, the yen has touched a three week peak against the dollar amid currency repatriation ahead of fiscal year-end.

Data overnight has shown a 2.3% increase in Household Spending and a slight decline in the Unemployment Rate from 4.6% to 4.5%; Manufacturing PMI has improved from 50.5 to 51.1 and Housing Starts are up 7.5% from a previous -1.1% decline. The line-up for the rest of the day includes German Retail Sales, French Consumer Spending and Eurozone Flash CPI; US data includes US Core PCE Index, Personal Spending, Chicago PMI and UoM Consumer Sentiment.

The firmer euro has given the precious metals a modest boost so far this morning with the complex currently up 0.4%. The metals remain vulnerable to pressure in the short-term with a breach of $1645 in gold and $1656 in platinum triggering a deeper correction, however, the metals have so far held key support levels and may look to turn higher should agreement to increase Eurozone fiscal firewall bolster risk appetite and once month/quarter-end book squaring is out of the way.

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