Asian markets reacted to yesterday news that Japan's S&P rating was cut to AA- on par with China. The MSCI Asia Pacific Index dropped 0.6%, Nikkei dropped 1.1%, and Hang Seng dropped 0.56% while Shanghai Composite was little changed and companies from Canon to Kia Motors missed analyst estimates when they released earnings reports. US stocks rose yesterday as home sales improved and Qualcomm beat analyst forecast when it released its earnings report, offsetting higher jobless claims data.

EURUSD declined to 1.3696 ahead of today's GDP report from the US which could show growth in the economy, GBPUSD declined to 1.5881 as consumer confidence dropped the most in almost two decades, USDJPY traded at 82.93 on speculation that Japanese exporters bought the Yen taking advantage of lower prices following Japan's credit rating cut and AUDUSD fell to 0.9898 on speculation that the RBA will slow the pace of interest rate hikes to help the nation to recover from the flood situation.

Japan's inflation declined 0.4%, smallest drop since 2009 while unemployment unexpectedly fell to 4.9% from 5.1%, first decrease since September and retail trade declined 2% YoY. The US is expected to release report stating that their GDP grew 3.5% in Q4 up from 2.6% posted the previous quarter and Moody's ratings said that it is possible that the US is kept on a negative outlook on its AAA rating as the budget deficit widens. UK consumer confidence declined 8 points to -29, lowest since March 2009 leading to the currency declining.

Today's calendar will be entirely focused on US GDP estimates along with personal consumption figures and University of Michigan confidence data.

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