Britain’s GDP in Line with Prior Estimates
Data released today showed that Britain’s GDP for the last quarter of 2014 was in line with the preliminary estimate. Going forward, tomorrow’s GfK survey is anticipated to show that optimism among British consumers strengthened for February, amid a healthy growth in domestic wages.
Across the Atlantic, January’s inflation data is expected to reveal that while consumer prices dropped for the first time since October 2009, the nation’s core inflation remained steady. In the Euro zone, GfK reported earlier today that morale among German consumers improved more than expected for March, ahead of the ECB’s stimulus programme beginning from next month.
Pound Sterling – UK Markets
The just out revised GDP report revealed that the UK economy expanded in line with the prior estimate for the final quarter of 2014, albeit at a slower pace from the previous quarter. This revised print revealed that government spending remained flat and exports rose at a firmer than expected rate for the quarter. Sterling has shown little reaction to the data and has continued to trade in a tight range against the greenback. Moving ahead, market participants will keep a tab on tomorrow’s GfK consumer confidence survey in the UK. The survey is anticipated to show that morale among consumers improved for February amid a robust pace of growth in the nation’s wage earnings.
Yesterday, the Pound remained supported against its key peers following the release of the upbeat BBA report for January. This report showed that the number of mortgages approved by UK banks rose for the first time in the last seven months, led by strong growth in personal loans and overdrafts. Furthermore, amid signs of pick up in Britain’s housing market, demand for home mortgages is expected to remain buoyed going forward.
US Dollar – US Markets
The greenback traded lower against its key peers yesterday after the US Federal Reserve Chairperson, Janet Yellen’s second day of testimony gave no new hints on the timing of an interest rate rise in the nation. Meanwhile, the US housing sector received some good news yesterday after new home sales dropped less than market expectations for January. Existing home sales had dropped sharply for January earlier this week. Additionally, the MBA mortgage applications for home purchases rose last week, even as those for refinance dropped sharply. Moving ahead, traders will eye today’s pending home sales data for January, with markets expecting a strong gain after last month’s drop.
The US Dollar is trading in a tight range against the common currency this morning, ahead of the key CPI data from US, scheduled for release today. Markets anticipate headline consumer prices in the world’s largest economy to fall for January. But consumer price, excluding energy, is forecasted to remain unchanged which may provide some reassurance to the Fed that inflation is largely being pressured by the decline in oil prices, as mentioned by Yellen in her testimony.
Euro – European Markets
The Euro is trading almost flat against the US Dollar this morning. Data released earlier today showed that the number of jobless people in Germany declined at a stronger than anticipated pace for February. With employment trends strong in the nation, consumers have more money to spend which was reflected in today’s Gfk survey report on consumer confidence in the German economy. The report showed that consumer morale is improving in Germany, with the reading coming above market expectations. Investors would also keep a tab on the consumer and business confidence readings in the Euro zone today, especially after the ECB President, Mario Draghi, suggested yesterday that he sees the first signs of confidence in the real economy. Traders will also eye the ECB’s targeted LTRO results today for further direction.
The Euro traded higher against the greenback yesterday after the ECB President indicated that the central bank was ready to accept Greek bonds as collateral against its loans once it is convinced that Greece is on track to successfully complete its bailout program. Earlier this month, the ECB had ceased to accept Greek bonds.
Other Currencies – Highlights
The Swiss Franc is trading on a firmer footing against the US Dollar this morning. Economic releases this week have shown some positive signs in the Swiss economy during the last quarter of 2014. The just released industrial production in Switzerland increased at a robust pace for the fourth quarter of last year, from the same quarter in 2013. However, Swiss industrial companies have been facing tough times recently after the Swiss National Bank removed the cap against Euro. The unexpected move by the SNB has made the nation’s goods more expensive abroad. Macro data released earlier this week showed an increase in the number of people employed in Switzerland in the fourth quarter compared to the third quarter of the last year.
On a negative note, yesterday’s economic release showed a drop in the UBS consumption indicator showed for January, indicating that consumer sentiment remains muted despite the recent strong employment figures.