The synchronised global recovery that........>

DOLLAR: The synchronised global recovery that began in mid-2016 may have given

way to a decoupling in Q118, based on both incoming GDP prints (including the Q1

UK disappointment) and consensus estimates for upcoming Q1 releases (including

US GDP up later today).

- Using weightings from the DXY dollar index (roughly 60% EMU, 14% UK, 16% JP,

10% CA), developed world GDP ex-US looks to have slowed to +2.2% y/y in Q118,

down from +2.5% Y/Y in Q417 (which was a 29-quarter high). In contrast, market

consensus for US Y/Y Q1 GDP is 2.8% Y/Y (a 12-qtr high) despite what is widely

regarded as a relatively lacklustre quarter.

- The implied 0.6pp US outperformance would be the highest since Q215, if

consensus is correct. A stronger-than-expected US print would cement the case,

particularly after lacklustre EMU member / UK numbers so far.

- This could be important for USD direction given the rough correlation between

DXY % Y/Y and the US vs rest-of-world growth differential. US GDP outperformance

usually coincides with dollar rallies, and adds fundamental support to the DXY`s

technical break out of a 15-month downtrend.