A Light Macro Calendar in Europe
Sterling has trimmed some of its gains and backed off from its highs this morning, amid an absence of any significant domestic macro data to impact trading. Looking ahead, market participants await data on consumer prices, retail sales and public sector net borrowing in the UK, scheduled for release next week.
Meanwhile, markets will keep a close eye on the US industrial production and the Reuters/Michigan consumer sentiment index, due later today, for fresh insights, amid lack of data from the Euro region and the UK.
Pound Sterling – UK Markets
After the excitement of the past few days, the week is set to end on a much quieter note amid a lack of any significant domestic economic releases that would influence trading in Sterling. Yesterday, there was only one publication, the upbeat RICS house price survey, which indicated fresh challenges for the new Conservative government. While increasing property prices is good news for home owners, it discourages potential buyers who are already finding it difficult to secure sufficient funds in the wake of subdued wage growth. Sterling gave up gains against the US Dollar by the end of yesterday’s trading session after the positive US jobless claims data revealed the 4-week average claims at a 15-year low.
The Pound is trading on a weaker footing against the US Dollar this morning. The Conference Board’s Leading Economic Index is due in the UK today. Looking ahead, the next week is set for a string of key economic indicators including UK consumer prices, retail sales and a report on public sector net borrowing.
US Dollar – US Markets
The US Dollar traded close to multi-month lows against the Euro early yesterday, however encouraging jobless claims data helped the greenback to recover some of the losses against a basket of major currencies. The number of applications in the US for first time unemployment benefits fell close to the lowest level in fifteen years last week, signaling that the US job market remains firm even as the economy tries to regain momentum after the slowdown in the first quarter of this year. Meanwhile, producer prices unexpectedly dropped in April, indicating that disinflationary pressures have not completely abated in the US economy.
The US Dollar has regained lost ground and has edged higher against the Euro this morning, ahead of the closely watched consumer sentiment indicator and industrial production data in the US later today. The preliminary print of the Reuters/Michigan Consumer Sentiment Index is expected to show an improvement this month.
Euro – European Markets
This morning, the single currency has given back its gains and has moved below the 1.14 mark against the US Dollar. Market participants look forward to crucial US data, scheduled today, for direction in the leading currency pair.
The Euro surged to multi-month highs against the greenback in yesterday’s trading session. The single currency remained supported, as recent positive releases from the Euro zone have strengthened hopes of recovery in the single currency economy. However, the Euro failed to sustain close to yesterday’s highs after the ECB President, Mario Draghi, in a speech yesterday, affirmed that the central bank will "implement in full" its ongoing monetary stimulus. However, he refrained from commenting anything related to Greek woes. Having tapped emergency funds to repay a loan installment to the IMF, Greece faces a challenging time, with recent data showing that the nation returned to recession in the first quarter.
Other Currencies – Highlights
The Japanese Yen is trading on a weaker footing against the US Dollar this morning. Earlier in the day, the Bank of Japan (BoJ) Governor, Haruhiko Kuroda’s speech invoked limited reaction, with the US Dollar – Japanese Yen currency pair continuing to trade range bound, near the 119.50 mark. The BoJ Governor reiterated that there is no need for further additional easing measures as underlying price trends are improving steadily. He stated that the central bank’s monetary easing programme is working well to revive the nation’s economy and that inflation expectations have risen due to the BoJ’s measures. However, he added that if price trend changes, the bank will make adjustments in its monetary policy to help achieve its desired inflation target at the earliest.
In economic news, Japan’s consumer confidence for April dropped for the first time in five months, confounding market expectations.