A Light Macro Calendar This Week
On Friday, a report revealed that the unemployment rate in the UK nudged lower amid a firm pace of growth in the nation’s labour market. However, the print failed to keep the Pound buoyed against its key peers. With a quiet start this week in terms of economic releases, the focus among Sterling investors is likely to be on the minutes of the BoE’s latest policy meeting scheduled for release this Wednesday.
Across the Atlantic, a print on Friday showed that core consumer prices for March rose in line with expectations. Separately, in a speech over the weekend, the ECB Chief, Mario Draghi, warned that a “Grexit” might push the Euro zone’s economy into “uncharted waters” and urged Greece to quickly reach an agreement with its creditors.
Pound Sterling – UK Markets
The Pound is trading higher against the Euro this morning. Monday will be a soft start for economic releases around the world, with no major indicators in the UK scheduled today. Data released over the weekend showed that on a monthly basis, property prices in Britain’s housing market increased for April, led by a fall in the number of properties available in the market. Recently, Prime Minister David Cameron, had announced plans to allow more people staying in social housing to purchase their homes at a discount. However, such a policy might inflate house prices further. Going forward, investors will eye the release of the minutes of the most recent BoE monetary policy meeting on Wednesday, to gauge any hawkish references to rate increases.
Sterling climbed above the 1.50 mark against the US Dollar on Friday after data showed that unemployment in the UK fell to its lowest level since July 2008. The latest employment figures, including a drop in jobless claims for March, has provided a boost to the Conservative Party ahead of the upcoming general elections in the UK.
US Dollar – US Markets
Market participants shrugged off fears of disinflation in the US after data showed that the rise in core consumer prices for March matched the previous month’s increase and was in line with market expectations, largely aided by a surge in the cost of housing and medical care services. However, the growth in overall prices was lower than expected for March. In other economic news, the Reuters/Michigan consumer sentiment index for April ticked higher than market expectations, suggesting that consumption could be expected to rebound in the second quarter and support overall growth in the economy.
The US Dollar is trading higher against the Euro this morning, amid a light economic calendar in the US today. For the day ahead, market participants will eye the Chicago Fed National Activity Index for more evidence to reaffirm whether growth was relatively weak at the end of the first quarter. In the week ahead, traders will look forward to reports on the US housing sector and data on durable goods.
Euro – European Markets
Fears of Greece leaving the Euro bloc strengthened over the weekend after Athens was told to deliver a detailed reform plan urgently to its creditors. Growing differences between Greece and its creditors stoked fears of a Greek default. The Euro is trading on a weaker footing against the major currencies this morning. Meanwhile, data released earlier today showed that on a monthly basis German producer prices rose at a slower than anticipated pace for March, largely due to a decline in oil prices. Moving ahead, traders will keep a tab on the construction activity data from the Euro zone for February, due today. Besides, the ECB is scheduled to offer details of its asset purchases through the latest stimulus programme.
The Euro traded higher against the Pound on Friday after data showed that consumer prices rose for the second consecutive month for March, easing fears of a prolonged period of deflation in the Euro bloc. The final print on annual core prices was in line with the previous estimate. For the week ahead, investor sentiment data and PMI releases from the Euro zone will attract attention.
Other Currencies – Highlights
Data released on Friday showed that Canada’s consumer prices rose more than market expectation for March, despite lower gasoline prices. Excluding the effect of oil prices, the consumer price index ticked up for March, led by higher food prices. Another report indicated that retail sales posted a gain for February, beating market expectations comfortably, following two consecutive monthly declines. The Canadian Dollar strengthened against the US Dollar on Friday, following stronger than expected macro data. However, the loonie later surrendered most of its gains against the greenback after US core CPI and the preliminary print of the Reuters/Michigan consumer sentiment came in stronger than expected.
The USD/CAD is trading below the 1.22 mark, as the Canadian Dollar remains supported by last week’s upbeat macro data. Moving ahead, the BoC Governor, Stephen S. Poloz, will participate in a panel discussion in New York today to talk about the effects of commodity prices on the nation’s economy.