Britain’s GDP Revised Up
Today’s final GDP data showed that the UK’s economic growth was unexpectedly revised up and business investments registered a rise for 2014, thereby strengthening expectations that domestic activity remains buoyant despite muted inflation in the nation. Moving ahead, Sterling investors will eye this week’s manufacturing and construction PMI readings for further direction.
Across the Atlantic, traders will note the Conference Board’s survey today which is expected to show that confidence among US consumers deteriorated for March. In Germany, reports released earlier today showed that retail sales dropped less than expected for February, while the number of unemployed people for March registered a decline for the sixth consecutive month.
Pound Sterling – UK Markets
The just out final UK GDP data has shown that economic growth for the last quarter of 2014 was unexpectedly revised up. The print further revealed that business investments in the UK increased, raising hopes that domestic activity remains positive, despite muted inflation. However, the Pound has shown little reaction to today’s data and has continued to trade on a weaker footing against the greenback this morning. Going forward, traders will eye this week’s manufacturing and construction PMI readings in the UK for further direction.
Yesterday, the Bank of England’s survey showed that mortgage approvals in the nation rose more than expected for February, thereby strengthening hopes that activity in Britain’s housing market is regaining momentum. However, credit borrowed by UK consumers registered a less than anticipated increase for February, despite a robust pace of growth in domestic wages continuing to boost spending appetite among local consumers. Separately, March’s GfK survey showed that morale among British consumers improved more than expected ahead of the nation’s general elections later this year.
US Dollar – US Markets
The US Dollar traded marginally higher against the Euro yesterday. Data released yesterday showed that US personal income grew at a solid pace for February as a fall in gasoline prices led to a surge in savings, while consumer spending only rose marginally. The personal consumption expenditures price index, the US Fed’s preferred inflation measure, rose for February after having declined in the previous month. More data showed that contracts to purchase previously owned homes climbed higher than market expectations for February, mainly driven by a steadily-improving labour market, lower mortgage rates and the likelihood of more renters looking to hedge against increasing cost.
The US Dollar is trading higher against the major currencies this morning, ahead of the Chicago PMI and Conference Board's consumer confidence data in the US. Yesterday’s consumer spending data, last week’s Reuters/ Michigan consumer sentiment index and earlier data on retail sales indicate that consumer confidence in the US has receded lately. In line with this, today’s Conference Board consumer confidence index for March is expected to show a decline.
Euro – European Markets
The Euro continued to slide against its key peers this morning, despite upbeat economic data from the region. In Germany, the number of unemployed people dropped more than expected in March, taking the unemployment rate a notch lower. Separately, retail sales for February in the nation dropped less than anticipated from the previous month. In France, producer prices rose from the prior month while consumer spending climbed for February. Traders now look forward to consumer inflation numbers in the Euro zone for March, scheduled later today, which is expected to show a slight decline.
The Euro traded on a weaker footing against the majors yesterday, despite posting upbeat confidence numbers across the Euro bloc. Data released yesterday showed that the final reading of consumer confidence in the Euro zone was at multi-year highs, indicating that a weaker Euro and lower oil prices have pushed the currency bloc onto a recovery path. The surge in optimism was spread across the Euro zone’s member nations, with Italy showing the biggest jump in morale, followed by Germany and Portugal.
Other Currencies – Highlights
The New Zealand Dollar has extended its losses against the US Dollar in today’s trading session. Data released by the ANZ showed that business confidence in New Zealand rose to a seven month high for March, lifted by improved sentiment in the agriculture sector. Higher rainfall, which eased fears of widespread drought in the nation, and a rebound in dairy prices during late February led to improvement in agricultural confidence. However, recent declines in dairy prices could weigh on sentiment in the sector next month. Additionally, outlook for commercial construction improved, while sentiment towards residential construction softened from its highs.
Meanwhile, data released earlier showed that the number of building permits issued in New Zealand continued to decline for a third month for February, as the pace of new home building slowed. Last month, the Reserve Bank Governor, Graeme Wheeler, had warned policymakers of a shortfall in properties to meet population growth. The central bank had also expressed concerns that an overheated property market could cause a house price bubble and lead to financial instability.