Britain’s Construction PMI Eases
Data just released has shown a more than expected ease in Britain’s construction PMI reading for March, bolstering concerns about a supply constraint in the country’s housing market. Going forward, with markets in the UK closed on account of a Good Friday holiday tomorrow, focus among Sterling investors is likely to shift to the next week’s services PMI reading in the UK to gauge the economy’s overall health for March.
In the Euro zone, account of the ECB’s latest monetary policy meeting will be eyed today for further direction. Across the Atlantic, after yesterday’s ADP survey showed that less than anticipated jobs were added in the country’s private sector last month, traders will cautiously eye tomorrow’s non-farm payrolls data in the US to verify if the print shows any downside surprise.
Pound Sterling – UK Markets
The just out data has revealed that Britain’s construction PMI nudged lower for March, thereby strengthening concerns of a supply constraint in UK’s housing market, amid reports of a shortage in the nation’s real estate segment. Moving ahead, market participants will keep tabs on next week’s services PMI reading and trade data in the UK. Considering that the services sector accounts for a major portion of Britain’s economy, the PMI will be a key release to gauge the nation’s private sector health for March. Additionally, February’s trade report will be eyed to ascertain if a stronger Sterling weighed on the nation’s exports.
The Pound remained under pressure against the Euro yesterday despite the release of the upbeat Markit manufacturing PMI reading in the UK. The report revealed that manufacturing activity in the nation expanded for March, at its firmest pace in the past eight months, amid robust domestic demand. Furthermore, new investments and export orders showed signs of a pickup, thereby fuelling expectations that the ECB’s recently launched stimulus programme is keeping the nation’s industrial activity buoyed on the external front.
US Dollar – US Markets
Downbeat US macro reports drove the US Dollar lower against the major currencies in yesterday’s trading session. The ADP employment report released yesterday showed that private employers in the US added fewer jobs than market expectations for March. One of the reasons for the weak job addition could be attributed to a stronger US Dollar which continues to weigh on the manufacturing sector in the US. The recent rise in the value of US Dollar has possibly impacted the segment of the manufacturing sector dependent on international trade. Separately, the ISM survey data indicated that the pace of expansion in the US manufacturing sector slowed for the fifth straight month for March. The West Coast port issue, lower oil prices, harsh winter and stronger US Dollar are some of the issues that have challenged growth in the nation’s manufacturing sector recently.
Employment data will continue to play a big part in the direction of the US Dollar against the majors today, with jobless claims scheduled for release. Trade balance and factory orders are also due for release today in the nation.
Euro – European Markets
The Euro traded marginally higher against the US Dollar yesterday, following an upward revision to the manufacturing PMI numbers of the Euro zone and its various economies for March. The final print revealed that manufacturing activity in the Euro zone registered the strongest reading in 10 months, beating market expectations. The recovery in the region was broad based as the final manufacturing PMI’s for its key economies of Germany, France and Italy all came in above expectations. The region benefitted as March saw an increase in new export orders partly helped by a weaker Euro. However, Greek headlines continue to cap gains in the single currency. The Greek government has submitted a fresh list of economic reforms to its creditors after its previous proposal sent on Friday received a luke-warm reception. The new measures are estimated to raise as much as €6 billion this year. Concerns are high, as Athens is due to make a €450 million payment to the IMF on April 9th.
The Euro is trading higher against the majors this morning. The calendar is light today in the region with the ECB’s account of its early March monetary policy meeting as the key release.
Other Currencies – Highlights
The Australian Dollar continues to trade lower against the US Dollar, despite yesterday’s downbeat US macro reports weighing on the greenback. The Australian Dollar approached its multi-year lows against the US Dollar soon after the release of the nation’s trade balance data. Growing expectation of further easing by the RBA at its next monetary policy meeting on April 7th, together with the collapse in iron ore prices seem to have additionally weighed on the local currency.
Data released earlier showed that trade balance in Australia hit its biggest deficit in 5 months, as import growth slowed for February and exports remained unchanged from the previous month. Markets expect trade figures to remain muted considering that a recovery in iron ore prices is unlikely any time soon due to lower demand from its major trading partner, China. Market participants will keenly eye the release of the non-farm payrolls report in the US tomorrow, as an upbeat reading has the potential to drag the Australian Dollar further lower against the greenback.