A Light Global Macro Calendar Today
On Friday, the release of February’s mostly downbeat industrial production data in the UK kept Sterling under further pressure, after the Pound-US Dollar pair dropped below the 1.47 mark earlier in the session. Separately, the NIESR kept its projection on UK’s GDP growth unchanged for the first quarter, raising expectations that the pace of recovery in the economy might remain robust through 2015.
In the absence of any notable economic updates in the UK today, investors are likely to remain focused on tomorrow’s inflation data in the UK. Across the Atlantic, tomorrow’s retail sales data will be keenly noted for further direction, especially considering that consumer spending remains a major driver of growth in the US.
Pound Sterling – UK Markets
Data released on Friday showed that the UK’S manufacturing production rose in line with market expectation for February, while the previous month’s reading was revised downwards. However, another report showed that industrial production rose less than expected for February. Following the release of the reports, the Pound fell to multi-week lows against the US Dollar on Friday. Sterling reversed part of its losses after the National Institute of Economic and Social Research (NIESR), in its report, stated that Britain’s GDP grew an estimated 0.6% in the first quarter of 2015, consistent with the average pace of growth since the mid of 2013. NIESR’s calculations suggested that that recent dismal performance in the production and construction sectors have weighed on economic growth in the recent quarter.
The Pound is trading on a weaker footing against the greenback this morning, as the currency remains under pressure amid rising political uncertainty ahead of the oncoming general elections in the UK. Going ahead, in addition to today’s measure of retail sales performance by the BRC for March, traders will note inflation numbers, due tomorrow.
US Dollar – US Markets
The US Dollar is trading on a firmer footing against its key peers this morning, amid a light macro calendar today. The US government is scheduled to release its monthly budget statement for March today and expectations are for the deficit to have narrowed considerably from the preceding month. Going forward, market participants will digest tomorrow’s retail sales and producer price inflation report for March, for further direction. In the latter part of the week, data on consumer prices and consumer sentiment will take the spotlight.
The US Dollar firmed against the Pound on Friday, as soft data in the UK fuelled concerns over the outlook for Britain’s first quarter growth. The greenback continued to be underpinned by expectations for higher interest rates, after the US Federal Reserve official, Jeffrey Lacker, reiterated that the US central bank needs to consider raising interest rates in June, and added that the Fed should lower rates if macro conditions weaken. Meanwhile, import prices in the US declined more than market expectations for March.
Euro – European Markets
The Euro is trading below the 1.06 mark against the US Dollar this morning, as the single currency remains pressured by the ECB’s stimulus programme that is driving interest rates lower in the Euro zone. Meanwhile, Greece’s deadline to present a list of reforms to Euro zone officials is drawing close, as the EU finance ministers are scheduled to meet next week to consider more funding for Athens. Data released earlier in the day revealed that the current account deficit in France widened for February, due to reduction in international trade growth. Going forward, traders will note Italy’s industrial output data which is expected to show a rebound for February, signalling that the manufacturing sector in Europe’s third largest economy is gathering momentum.
The Euro remained range bound against the Pound on Friday, as the single currency failed to capitalise on the unfavourable UK macro data. Data released on Friday revealed that industrial production in France remained flat on a monthly basis for February. Separately, another report showed that the adjusted industrial output in Spain unexpectedly improved for February.
Other Currencies – Highlights
The New Zealand Dollar is trading on a weaker footing against the US Dollar this morning, as the greenback continues to strengthen amid renewed hopes of a mid-year rise in interest rates. Going forward, trading in the currency pair will be influenced by New Zealand’s first quarter survey of business confidence scheduled later today. The only key release in the US today is its monthly budget statement for March.
Meanwhile, data released over the weekend showed that New Zealand’s retail card spending continued to grow for March. Data suggested that lower petrol prices coupled with low mortgage rates and high house prices encouraged consumer spending in New Zealand for the first quarter. In addition, good summer weather also benefitted retail sales numbers as consumers spent more on restaurant food and socialising.