UK Mortgage Approvals Decline

In the midst of rising house prices and speculation of a potential housing bubble at home, the just out domestic data has showed a continuing decline in mortgage approvals for April which is likely to ease pressure on the BoE to raise interest rates in order to reign in the housing market. Against this backdrop, tomorrow’s Nationwide house prices data will gain market interest for further cues. In the US, today’s durable goods orders report will be closely followed by investors to gauge the health of the nation’s manufacturing sector. In the Euro zone, a speech by Mario Draghi will attract market interest for hints on the likely measures that the central bank might adopt in its policy meeting next month.

Pound Sterling – UK Markets

The just released domestic economic data has shown a fourth consecutive month of decline in mortgage approvals for April which is likely to temporarily relieve concerns regarding a potential overheating housing market in the UK. However, the Pound has shown little reaction to the weak data and is hovering below the 1.69 mark against the US Dollar this morning. In a quiet trading session yesterday on account of the Spring Bank holiday, Sterling was broadly lower against the greenback. However, losses in the Pound were limited tracking comments from a BoE official, Charlie Bean. The BoE Deputy Governor indicated over the weekend that the key interest rate in the nation is likely to rise to 3% over the next three to five years. Bean further opined that the central bank must raise interest rates gradually to avoid hampering the domestic economic recovery too soon. Later today, the US consumer confidence and durable goods orders reports will keep investors in the Pound-US Dollar pair interested.

US Dollar – US Markets

The US Dollar continued to trade close to its recent highs against the Euro this morning, as traders remained averse towards seeking exposure in the single currency following the unprecedented results witnessed during the European Parliament elections. Market participants will remain watchful, as today’s economic data from the US is likely to prove crucial for the greenback during the upcoming trading sessions. Traders will keep a close watch on today’s durable goods orders data from the US in order to decipher the trend in the economy after data showed that economic growth almost stalled for the first quarter. Also, today’s house prices data will attract market attention, especially after data released last week showed a modest uptick in US home sales volume. Regional manufacturing indicators and consumer confidence data from the US will also shed light over the economic prospects for the second quarter. Besides, news flows emanating from the Euro zone, especially comments for the ECB Chief, will have a bearing on the greenback in today’s trading session.

Euro – European Markets

The common currency was under pressure yesterday as EU-sceptic and far-right parties performed strongly in the European Parliament elections. Meanwhile, the ECB Chief once again reiterated that the central bank could adopt pre-emptive policy measures in order to combat deflationary pressures. However, the single currency has managed to recover from yesterday’s lows this morning, as much of the bad news seems already discounted during the recent trading sessions. Although the successful completion of the Ukrainian Presidential elections boosted prospects of peace in the region, market participants remain wary as incidents of violence after weekend presidential elections highlight that the situation in Eastern Europe remains fragile. On the economic front, yesterday’s German consumer confidence survey for June came in line with market estimates. With no Euro zone economic releases due today, markets will closely track speeches from the ECB President and various officials due later today for more clarity over the stance that the ECB might adopt in the next week’s monetary policy meeting. Besides, a crucial set of US economic releases due today will influence currency markets.

Other Currencies – Highlights

The Swiss Franc is trading lower, albeit in a tight range, against the greenback in today’s trading session, even though data released earlier today showed a more than expected rise in the nation’s trade surplus for April. While exports recovered from the previous month’s decline, the continued drop in imports resulted in the trade balance to reach its two-month high for April. Additionally, easing concerns in Eastern Europe following the Presidential elections has somewhat dampened the safe haven appeal of the Swiss Franc. With no more domestic economic releases on cards today, the Swiss Franc will take direction from a slew of crucial US macro reports scheduled for release in the latter half of the trading session. Looking forward, markets will keep a tab on Switzerland’s first quarter GDP report scheduled tomorrow which is expected to show an acceleration in economic growth. Further, the Swiss UBS consumption indicator print will be closely followed by market participants to ascertain the nation’s private consumption trend.