A Light Day for Macro Releases
The RICS survey released overnight revealed that activity in Britain’s housing market improved more than expected for March. With little on the domestic macroeconomic front today, focus among market participants is likely to stay on tomorrow’s labour market data in the UK, to gauge if domestic wages continued to grow at a robust pace, despite muted inflation in the nation.
Following yesterday’s monetary policy meeting the ECB Chief, Mario Draghi, expressed confidence in the central bank’s stimulus programme and stated that he sees no signs of a bubble in the bond markets. Across the Atlantic, the weekly jobless claims survey along with speeches by key US Fed officials is likely to keep investors interested in the latter half of today’s trading session.
Pound Sterling – UK Markets
The latest RICS housing price balance survey revealed that supply constraints in the housing market, coupled with an increase demand, helped push prices to rise at their fastest pace in five months for March. The recent survey results indicated that uncertainty about the May 7 election is causing traders to hold off from putting properties on the market. On the other hand, the negative trend in buyer enquiries seems to have dissipated with the survey finding that demand for residential property was higher for March. The survey results also indicate a growing confidence among investors that the cost of borrowing will stay low for a prolonged period.
The Pound is trading on a firmer footing against the Euro this morning, amid no macro releases in the UK today. Going forward, Sterling is expected to trade with higher volatility, ahead of Friday’s jobs report in Britain. The unemployment rate is expected to tick lower, and the number of jobless claims is expected to shrink. Any downside risk will push Sterling further down against its major counterparts.
US Dollar – US Markets
The US Dollar nudged slightly lower against the Euro yesterday, as the greenback lost support after the latest industrial production report added to the list of disappointing economic indicators for the first quarter. Industrial output fell more than market expectations for March, as a stronger US Dollar and softer global demand weighed on the nation’s exports. Separately, the Fed in its Beige Book report revealed that investment in oil and gas drilling has declined and resulted in layoffs in the energy sector across multiple regions. It further added that the US economy improved modestly during mid-February and the end of March. Meanwhile, the NAHB report released yesterday eased concerns about the health of the US housing market as the index climbed higher than market expectations for April.
The US Dollar is trading in a tight range against the Pound this morning, as traders look forward to more data from the US housing market today. Also, the latest weekly report on jobless claims is scheduled for release in the nation, later today. Tomorrow, consumer price inflation figures in the US will attract market attention.
Euro – European Markets
The Euro hovered in a tight trading range against the Pound yesterday. The ECB President, Mario Draghi, in the press conference post the central bank’s official meeting, reaffirmed that the ECB will continue its asset purchase programme until at least September 2016. He further added that the Euro economy has gained momentum, as lower oil prices which cut costs for businesses and households, coupled with the central bank’s stimulus, have boosted the region’s economy. As expected, the ECB kept its official interest rates unchanged. Meanwhile, the ECB President shrugged off queries regarding Greek negotiations with its international creditors to unlock bailout funds. In economic news, the Euro zone’s trade surplus widened in line with market estimates for February and the final print on consumer prices for Germany came in line with earlier estimates for March.
The Euro is trading on a weaker footing against the greenback and Sterling this morning amid a light economic calendar in the region. Moving ahead, investors will eye consumer price inflation data in the Euro zone, due tomorrow, for further direction.
Other Currencies – Highlights
The Australian Dollar rose above the 0.77 mark against the US Dollar, after today’s economic figures and revisions for March painted a healthier than expected picture of Australia’s labour market. Data showed that the unemployment rate in Australia unexpectedly slipped, while markets were anticipating it to rise for March, with the number of people employed in the nation rising above market expectations. Additionally, the jobless rate was revised lower for February. Following the upbeat jobs report, the odds of a RBA cash rate cut in its May monetary policy meeting have reduced. Further economic data showed that consumers’ inflation expectation reading advanced from the previous month for April. However, earlier this week, the IMF had raised concerns that inflation in Australia could continue to fall due to the slump in iron ore prices.
With no significant triggers on the domestic macro front this week, market participants will keep a tab on the housing starts and building permits data in the US for March, scheduled later today, for further direction on the AUD/USD currency pair.