BoE’s Inflation Report in Focus
Sterling investors are likely to remain focused on the BoE’s quarterly inflation report in the UK today. Slow growth in domestic consumer prices have been a major concern among central bank policymakers in the nation lately. With today’s publication expected to show a further downside in the nation’s inflation outlook, Mark Carney’s press conference will be eyed today to gain more clarity over the future course of action that the BoE plans to adopt.
Across the Atlantic, the retail sales update will be a key event to gauge the health of consumer spending in the US. In the Euro zone, investors remained concerned about a possible Greek exit from the region, especially after the nation failed to reach an agreement with its international creditors yesterday.
Pound Sterling – UK Markets
The RICS survey released earlier today revealed that UK house prices for January rose less than expected, at its slowest rate since May 2013. Considering the recent Halifax report which showed an improvement in Britain’s housing market activity, today’s soft RICS data has stoked uncertainty about the health of the nation’s real estate market. However, Sterling traders have shown little reaction to today’s data as they remain focused on Mark Carney’s Press Conference along with the BoE’s quarterly inflation print scheduled later today. The quarterly publication is anticipated to lower Britain’s inflation outlook and give some hints on the duration of the BoE’s current accommodative policy stance, especially amid prospects of deflation in the nation. Additionally, the central bank Chief’s comments will be eyed to see if he resorts to a slightly less dovish tone today, particularly considering the diminishing slack in the country’s labour market and the robust growth in domestic wages.
Yesterday, the Pound lost ground against the greenback after Greece failed to reach a fresh bailout deal in the Euro group meeting.
US Dollar – US Markets
The US Dollar is trading mostly lower against its major peers this morning ahead of the retail sales data in the US today. Markets expect retail sales to fall for January, although domestic sales excluding auto and gas are anticipated to rebound, especially after clearance sales of winter merchandises kept consumer spending buoyed last month. Additionally, market participants will keep a tab on the weekly initial jobless claims data due today to check whether the labour market trend is consistent with last month’s robust payroll gains. Going forward, the preliminary Reuters/Michigan reading will be eyed in the US tomorrow to ascertain if morale among domestic consumers remains close to its pre-recession highs for February.
The greenback traded in a tight range against the single currency in yesterday’s trading session after Greece was unable to reach an agreement with its international creditors in the Euro group’s meeting yesterday, thus keeping any upside in the Euro under check. In the US, the MBA survey revealed that mortgage applications for the prior week declined at their strongest pace in the last six weeks.
Euro – European Markets
Data released earlier today revealed that Germany’s consumer price inflation was revised down for January, stoking concerns that low global oil prices are bolstering deflationary pressures in the nation. Meanwhile, the Euro has continued to trade in a tight range against the US Dollar this morning ahead of the Euro zone industrial production report for December. This report is expected to show that industrial production in the region continued to climb for a fourth straight month, offering signs of a modest pickup in overall economic activity ahead of the ECB’s quantitative easing programme starting next month. Going forward, tomorrow’s preliminary GDP readings across key European nations will attract considerable attention among Euro investors to gauge the bloc’s overall economic health for the last quarter of 2014.
In the Euro group meeting yesterday, no deal was reached between Greece’s new government and the EU’s Finance Ministers. With Greece’s bailout funds scheduled to end this month, the nation’s failure to reach an agreement with its international creditors could have significant ramifications on the region’s financial stability.
Other Currencies – Highlights
The Aussie Dollar lost ground against the greenback in today’s trading session and fell below the 0.77 mark following the release of the downbeat labour market report in Australia. The print revealed that the number of unemployed people in the nation increased more than expected and participation in the labour market increased surprisingly for January, which brought Australia’s jobless rate to a multi-year high last month. Considering that the Reserve Bank of Australia unexpectedly cut interest rates in its policy meeting last month, prospects of another rate cut cannot be ruled out amid continued signs of weakness in the nation’s job market. Later today, a speech by the RBA Governor, Glenn Stevens, will attract significant attention among investors for further direction to risk appetite.
Going forward, today’s retail sales report along with tomorrow’s flash Reuters/Michigan consumer confidence reading in the US is likely to prove crucial to the Aussie Dollar-US Dollar pair.