German Constitutional Court muddies the.......>

FOREX: German Constitutional Court muddies the waters

- The much-watched judgement of the German Constitutional Court will not have

what the ECB had hoped for, as the judges issued exceptions to the PSPP element

of the ECB's asset purchase programme. While the judges partially dismissed the

case, they added that some of the ECB's decisions are not backed by EU treaties

and the onus is now on the ECB to show that QE measures are proportionate,

concluding that the German government and Bundestag now have a duty to take

active steps against the PSPP in its current form.

- The uncertainty around the longer-term impacts on ECB policy are evident in

the weaker EUR, which has seen EUR/USD retreat below $1.0850 and EUR/GBP edge

back below the 200-dma at 0.8724. Equities slipped on the German court

headlines, keeping USD and JPY nicely bid, while AUD, CAD and other

commodity-tied FX trades well on better oil prices this morning.

- Attention turns to Canadian and US trade balance numbers as well as the ISM

non-manufacturing read for April. Fed's Evans, Bostic and Bullard are all also

due to speak.