In the week ahead, investors should be focused on earnings, particularly earnings for the banking sector - likely helped by recent changes to accounting laws to water down mark-to-market accounting. On the economic data front, releases include inflation figures, TIC data and industrial production. CPI is expected to come in at 0% y/y while PPI is expected at -2.0% y/y. Despite the lag in TIC data, will be interesting to see how the flows stack up to the dollar strength in February. Another negative industrial production print is expected though it should continue the improvement seen over the past two IP readings.

Ahead today, retail sales for March are due at 1230 GMT. Market consensus is for a 0.3% gain compared with a 0.1% fall in February. President Obama speaks on the state of the economy at 1530 GMT and will be a widely watched speech. Fed Chairman Bernanke speaks at 1730 GMT.

Last week German Finance Minister Steinbrueck remained concerned the world could face an inflation crisis in the medium-term given the large amount of money that is being pumped into the financial markets, though he said there isn't a problem in the near term. Steinbrueck also preferred to wait to see how the already launched stimulus measures work before contemplating a third stimulus package and he submitted a program to Chancellor Merkel that would use government funded bad banks to remove toxic assets from bank balance sheets. German inflation levels continue to be negative on a m/m basis but the ECB is still adamant that deflation risks are low, even though it has acknowledged that negative inflation for a few months is a likely prospect up ahead. We remain cautious on the euro and maintain our 1m EURUSD forecast

China released its trade balance for March on Friday and showed further declines in both imports and exports. Interestingly however, China imports from Australia actually grew in y/y terms in contrast to imports from China's other major trading partners. Imports from the US fell by 12.7% y/y, a slight improvement from the -21% y/y rate recorded over January and February. Australia sends approximately 80% of its exports to China and any pick-up there should be beneficial for the AUD. In NZ this morning, retail sales for February rose by 0.2% m/m, after falling 1.2% m/m in January. The data does not change the view about the underlying dynamics in the NZ economy and we continue to call for a 50bp reduction in the OCR to 2.5% at the end of this month. We remain negative on the NZD relative to the AUD.

The BoC Loan Officer Survey and the BoC's Business Outlook Survey showed that conditions remain difficult in Canada. Overall business lending conditions remain tight but have eased somewhat on the margin. Business sentiment remains negative. While some indicators have inched up from historical lows, the results of the spring survey continue to suggest a weak outlook for the Canadian economy. BoC officials have taken a cautious stance on non-standard policy measures. If anything, the data will reinforce them to stay on the sidelines for now. We expect domestic data to stay subdued and should risk appetite ease, USDCAD will fail to crack 1.2200, a key support.

Tags: Risk Appetite