BoE Minutes Show Unanimous Rate Decision
The minutes of the latest monetary policy meeting showed that policy setters were unanimous in their decision to hold the borrowing costs at 0.5%. The minutes indicated that the central bank officials were optimistic that inflation would bounce back next year as downward pressure on prices fade. Moving ahead, investors will eye data on retail sales and a report on public finances, tomorrow.
In the Euro zone, the preliminary print of consumer confidence will be in focus later today. Across the Atlantic, a report on existing home sales will be in focus today as recent housing sector reports have indicated mixed numbers, and thus fuelled concerns about demand in the US housing market.
Pound Sterling – UK Markets
The just out minutes of April’s monetary policy meeting revealed that the nine member committee voted unanimously in favour of keeping interest rates unchanged. In addition, the publication revealed that the central bank foresees a greater chance of inflation recovering strongly next year. The BoE minutes indicated that policy setters were upbeat about that nation’s growth prospects following a string of positive economic releases in Britain. Following the commentary from the central bank, Sterling is trading higher against the US Dollar. Going forward, Britain’s retail sales data for March will likely influence trading in the Pound tomorrow. Also, market participants will keep a tab on the public sector net borrowing data in the UK, scheduled tomorrow for release.
The Pound traded higher against the US Dollar in yesterday’s trading session, amid absence of any fresh economic news in the nation. Moving ahead, the general election in the UK scheduled next month is set to take center-stage.
US Dollar – US Markets
The US Dollar is trading marginally lower against the major currencies this morning, ahead of existing home sales data in the US, scheduled later today. Market participants expect sales of previously owned homes to increase for March. However, last week’s housing sector reports had confounded market expectations, with the number of housing starts and building permits coming in below estimates. On the flip side, NAHB’s housing market index anticipates improvement in the April figures. Traders will eye today’s report to gauge the overall demand in the US housing market. Besides, tomorrow’s new home sales data will also attract attention, as traders expect the report to be soft given the dearth of supply in the market.
The US Dollar lost ground against the single currency, and got little support against a basket of other major currencies in a quiet trade yesterday after a recent string of soft economic data dampened optimism in the nation’s recovery.
Euro – European Markets
The Euro edged slightly higher against the majors yesterday, with the Euro moving above the 1.07 mark against the greenback. Meanwhile, the ZEW survey in Germany came in mixed, with the economic sentiment dropping unexpectedly for April but investors seemed more confident about the nation’s current situation. The survey indicated that export prospects of the nation dampened, amid weakness in the global economy. However, investors expect that low oil prices and a weak Euro would sustain Germany’s growth for at least the next half year. In addition, Greek woes continued to linger, as some media reports suggested that the ECB is considering placing greater restrictions in the form of higher interest rate on the ELA borrowing of Greek banks.
Extending its recovery, the Euro is trading firmer against the US Dollar this morning. Data released earlier today indicated that Italy’s industrial orders and sales advanced in February from the previous month, indicating improving business environment in the Euro zone’s third largest economy. Moving ahead, investors will eye today’s preliminary print of Euro zone’s consumer confidence, for further direction.
Other Currencies – Highlights
The USD-JPY currency pair traded lower in the Asian session after the US Dollar gave up its previous session gains against most of the major currencies. The Japanese Yen rebounded after data showed that, on a monthly basis, the nation returned to a trade surplus for the first time in nearly three years. The surplus for March was way above market expectations, as a weaker Japanese Yen provided support to the nation’s economy that has been struggling with weak domestic spending for years. Data showed that exports rose in line with market expectations, boosted by strong demand from its major trading partner, US. However, the trade surplus received a big push from the slump in global oil prices which have reduced the nation’s import costs.
With no notable domestic triggers today, market participants now look forward to a report on existing home sales in the US for further direction. Moving ahead, tomorrow’s manufacturing PMI in Japan will attract attention.