What’s been happening?

Pound Sterling – UK Markets 

The British pound closed the day virtually unchanged against the dollar on Wednesday and fell to its lowest level vs the euro in four weeks pressured by macroeconomic data releases. 

The inflation report published by the UK’s Office for National Statistics (ONS) on Wednesday showed that the Consumer Price Index (CPI) in March came in at 1.9% on a yearly basis to match February’s reading and fell short of the market expectation of 2%. Further details of the report revealed that the Retail Price Index (RPI) and the Producer Price Index - output (PPI) stayed unchanged on a monthly basis in March.

US Dollar – US Markets

The greenback stayed relatively quiet against its major peers on Wednesday in the absence of significant macroeconomic drivers and the subdued trading action. 

The data published jointly by the U.S. Census Bureau and the Bureau of Economic Analysis showed that the trade deficit narrowed to $49.4 billion in February, coming in better than the market expectation for a deficit of $53.3 billion. “February exports were $209.7 billion, $2.3 billion more than January exports. February imports were $259.1 billion, $0.6 billion more than January imports,” the press release read. Other data from the U.S. revealed that wholesale inventories in February rose 0.2% but was largely ignored by the participants.

Meanwhile, in its latest Beige Book, the Fed said that the economy expanded at a slight-to-moderate pace in March and early April. “Most Fed districts said growth continued at a similar pace as in the previous report, but a few reported some strengthening,” the Fed said. The publication further revealed that reports on manufacturing were favourable but the trade-related uncertainty was still a cause for concern.

Euro – European Markets

The Eurostat announced that the Consumer Price Index on a monthly basis in March rose to 1% from 0.3% in February as expected and stayed unchanged at 1.4% on a yearly basis. The core CPI, which excludes volatile food and energy prices, remained steady at 0.8% annually to match the previous reading and analysts’ forecasts. Another report showed that the trade surplus of the eurozone widened to €17.9 billion in February following January’s uninspiring €1.5 billion reading.     

Commenting on the scepticism about the ECB’s growth forecasts later in the day, European Central Bank Governing Council member Ewald Nowotny said that the bank was unlikely to significantly cut economic forecasts in June. “It is not yet the time for the Governing Council to introduce tiering on rates,” Nowotny argued and added: “We should not use tiering to keep rates permanently low.” 

What’s coming up? 

UK: The UK’s Office for National Statistics will release the retail sales report, which is expected to show a monthly contraction of 0.3% in March.

US: Retail sales, weekly jobless claims, Philly Fed Manufacturing Index, and Markit PMI data will be featured in the U.S. economic docket.

EU: The IHS Markit will publish the preliminary Manufacturing and Services PMI reports for Germany and the euro area on Thursday. Additionally, Destatis will release the Producer Price Index data for Germany.