A Slow Day for Scheduled Global Economic Updates
Today’s economic calendar is very light with only the release of new homes sales data in the US expected to attract some market interest. Data is anticipated to show that overall sentiment supported sales which led to a rebound in February, following a decline at the start of 2016.
As the Easter holiday approaches, volumes could remain thin and this means that trading among the major currency pairs will largely be driven by global market sentiment, particularly after yesterday’s deadly terrorist attack in Brussels. Today’s trading action will closely be tracked as Europe grapples for a second day with the ramifications of yet another wave of coordinated violence. The Brussels attacks, meanwhile, have lent support to campaigns for Britain to leave the European Union.
Pound Sterling – UK Markets
The Pound has extended its losses and slipped just below the 1.42 mark against the greenback this morning amid growing concerns that Britain will leave the European Union. Yesterday, Sterling slipped against the majors on news of the deadly terror attack in Brussels. Investors seem to believe that new terrorist attacks in Europe will further trigger UK citizens to actively consider voting in favour of Brexit. In the absence of key UK economic data releases today, further trading in the Sterling - US Dollar currency pair will largely be influenced by the overall market sentiment. Tomorrow, market focus will be on UK retail sales data which will be released ahead of the Easter Bank Holiday weekend. The retail sales figures will be closely eyed for signs that consumers remain the major driver of economic growth despite subdued wage growth.
Yesterday, in economic news, the UK inflation rate remained unchanged in February after three months of rising consumer prices. Subdued price pressures in the UK signal that monetary policy might need to be eased and this diminishes any expectations that the Bank of England will raise rates this year.
US Dollar – US Markets
Yesterday, the US Dollar partly recovered from its losses against most of the major currencies as markets focused on a growing number of Federal Reserve officials this week floating the possibility of an interest rate rise as early as April. Chicago Fed President, Charles Evans, predicted two interest rate increases this year citing the strength in the US economy. However, according to an early Markit survey report published yesterday, US manufacturing activity grew at a slower than anticipated pace in March. This data is likely to have added to concerns that the weak performance of the manufacturing sector will weigh on first quarter growth. Meanwhile, in the past few weeks, regional manufacturing surveys including the Empire State manufacturing survey and the Philly Fed business activity index for this month have come in stronger than expected.
Later today, investor focus will be on new home sales data which will provide more context for evaluating the outlook and health of the US housing market. This follows a surprisingly weak report on existing home sales for February, released earlier this week.
Euro – European Markets
The Euro traded lower against the greenback yesterday. On the macro front, the ZEW survey indicated that economic sentiment in the Euro zone slightly fell in March but was better than market expectations. Data noted that the uncertainty surrounding the growth outlook of key emerging economies, oil price movement and the external value of the Euro made respondents cautious about the Euro zone economy. Additionally, the Euro zone private sector activity showed improvement in March, according to surveys of purchasing managers, an indication that the economy regained some momentum at the end of the first quarter.
The shared currency continues to trade lower against the US Dollar today, with the currency pair currently trading below the 1.12 mark as yesterday’s terror attack in Brussels continues to weigh on the Euro. Earlier today, data showed that wages grew in Italy for February. This update follows the previous week’s data which showed that the cost of labour in the overall Euro area grew in the fourth quarter, mirroring wage growth from its constituent economies and has raised prospects of further wage growth in 2016.
Other Currencies – Highlights
The Kiwi Dollar has continued to underperform against the US Dollar today as the greenback remains supported following yesterday’s terror attack in Brussels. Additionally, the New Zealand Dollar lost further momentum against the major currencies today, weighed by weaker commodity and oil prices.
Moving ahead, investors are now looking to New Zealand’s trade balance data which is scheduled for release later today. In January, New Zealand had recorded a trade surplus for the first time since May 2015 and expectations are for the nation to clock in another trade surplus for February in today’s update. New Zealand’s trade data is likely to attract a significant amount of interest among investors as exports are a major contributor to the nation’s economic growth. Also, the Reserve Bank of New Zealand had earlier this month slashed its interest rates, citing concerns about its trading partners. Also on tab will be the weekly update on MBA mortgage applications and new home sales data, due later today in the US, for further direction.