Not if, but by how much

So it's Fed day today, though Macro Man struggles to get excited about a meeting that even Janet Yellen conceded last month isn't really live.  To be sure, the tone of the US data has remained poor; though it is perhaps unsurprising that the hard data has not improved (given that we're not getting April readings yet), Macro Man has nevertheless been somewhat disappointed that confidence data also seem to have pulled back.  As such, it looks to be not a question of "if" but "by how much" the Fed tweaks its characterization of the US growth dynamic and outlook.

Before that, of course, we get the release of Q1 GDP.  The consensus looks for a relatively weak figure of 1.0% annualized, though frankly, given how rubbish most economic reports were last quarter it seems a touch generous if anything.   Indeed, punters will no doubt recall last year and the shock of a negative Q1 GDP print; although the low estimate in the consensus panel appears to be 0.2%, would anyone really  be completely shocked if it came out negative?

Of course, one could easily argue that a bad number and a dovish Fed are already in the price of rates and the dollar, while equities are pricing off of China/ECB QE/Apple Watch/LOLZ.  Although your author is leery of talking his own book, he cannot help but observe that EDZ5 may be tracing out a nice little head and shoulders pattern, with the neckline at 99.375.  The target is only 6 ticks away or so- hardly a "macro" trade- but a break could suggest that the theme of pricing US weakness may have run its course.  That, in turn, could prove useful for other asset prices.

Obviously the dollar has been as firm as a soggy newspaper recently, not only against the usual suspects like the euro and sterling (where Macro Man establish a thankfully small short last week), but also oil, which is actually up on the year (as measured by CLZ5.)  In truth, a moderate rebound in the oil price is probably no bad thing, as it puts paid to the worst of the OMGDeflation nonsense and mitigates the risk of an energy sector implosion.  Whether it's a tell for the Big Dollar is another question entirely; unlike the ECB and BOJ, for example, oil isn't conducting QE!

Still, the euro's approaching some interesting levels.  There's a layer of resistance between 1.10 and 1.1050 that's been rock-solid so far this year.   Similar to the EDZ5 chart above, should it break, it would suggest a deeper challenge to the "US Exceptionalism" theme.

While we might not get a resolution tomorrow, given the proximity of these level we should get one soon- next week's payrolls, perhaps?  Either way, it will hopefully prove more interesting than the last few weeks of back'n'fill.