A Light UK Macro Calendar Today
In the absence of any important economic releases in the UK, Sterling investors are likely to remain on the sidelines ahead of tomorrow’s trade report. The print should verify if the recent surge in the Pound-Euro pair weighed on Britain’s international trade activity, especially considering that the Euro bloc is a key trading partner of the UK.
Across the Atlantic, the minutes of the US Fed’s latest policy meeting will be digested later today to gauge the timing of an interest rate rise in the nation. In the Euro zone, investors will keenly track today’s retail sales data for February, particularly after sales in Germany registered a less than expected fall for the month.
Pound Sterling – UK Markets
The Pound is trading on a firmer footing against the greenback this morning amid no notable macro triggers on the domestic front. Later today, the RICS housing market survey is anticipated to show that activity in the country’s real estate segment improved last month. Going forward, traders will keep a tab on Britain’s trade data tomorrow to verify if a weaker Euro, along with an elevated Sterling, weighed on the nation’s export growth for March.
The Markit report released yesterday showed that activity in Britain’s services sector grew at a stronger than expected pace for March, at its firmest in the last seven months. The print revealed that hiring pace in the nation’s private sector remained robust and business investments showed signs of a pickup, however, costs of domestic firms rose at a slower rate. Markit further hinted that Britain’s economy probably expanded by 0.7% for the first quarter of 2014, higher than the previous quarter’s growth. However, Sterling investors showed little reaction to yesterday’s upbeat data and the Pound remained under pressure against the US Dollar.
US Dollar – US Markets
Reversing its earlier session losses, the Dollar firmed against its major counterparts yesterday after financial markets around the world resumed trading after the Easter holiday. Although downbeat official labour market data has cast doubts over the state of affairs in the US economy, market participants will continue to scrutinise incoming economic data in order to ascertain the Fed’s policy stance during 2015. The general trend of job growth in the US has remained intact as yesterday’s JOLTS report showed that the number of job openings rose to multi-year highs for February. The IBD/TIPP reading indicated optimism in the nation’s economy for May. In separate data, consumer borrowing in the US climbed more than expected for February, as the value of non-revolving credit such as student loans and car loans surged.
The US Dollar is trading on a weaker footing against the majors this morning, ahead of the FOMC’s March meeting minutes. Traders do not expect any significant new information to be unveiled today, given the March meeting included updated forecasts and the weeks following the meeting have included numerous speeches from key officials.
Euro – European Markets
Data released earlier in the day showed that German factory orders unexpectedly fell for a second month for February, indicating that demand was weaker in the first two months. However, markets expect the trend to improve in the following months after PMI data released last week showed that German manufacturing rose to multi-month highs for March. Meanwhile, trade data in France showed that deficit narrowed for February, boosted by a surge in exports. The Euro is trading higher against the greenback this morning. Trading trends in the region will likely be influenced by the release of the minutes of the US Federal Reserve’s March policy meeting. The Euro zone’s retail sales data for March, due later today, is likely to attract attention.
The Euro traded sharply lower against the majors yesterday after the service and composite PMI numbers came in slightly lower than preliminary estimates. However the overall trend showed continued improvement in the region’s private sector activity. Meanwhile, the Sentix investor confidence climbed for April in the Euro zone following the launch of the ECB’s asset purchase programme.
Other Currencies – Highlights
The Japanese Yen edged higher against the US Dollar, following the release of the Bank of Japan (BoJ) monetary policy statement. The central bank kept its massive monetary stimulus intact as expected, while reiterating that the world's third largest economy is recovering moderately. The BoJ maintained that consumer prices will remain pressured due to cheaper oil and expects prices to gradually rise as consumers and businesses spend more and economy recovers further. The BoJ began its massive buying of bonds and other assets in April 2013, but it is still not close to achieving its desired 2% inflation target.
Following the BoJ’s statement, a survey data indicated that the measure of peoples’ assessment of the Japanese economy improved for the fourth straight month for March. With optimism climbing higher in the nation and unemployment rate easing for February, consumer spending is expected to improve in the coming months. Previously released data showed that trade deficit in Japan narrowed sharply for February, as imports tumbled from the previous month.