Britain’s Industrial Production Rises Unexpectedly
Data just released revealed that UK’s industrial production grew at the fastest pace in six months, easing concerns about a slower economic growth. Also, manufacturing production rose for the second consecutive month. In addition, the NIESR’s GDP estimate for three months to April, scheduled later today, will provide an indication on whether growth picked up steam in the beginning of the second quarter.
Across the Atlantic, the US government’s statement on its monthly receipts and payments, due today, will attract market attention. In the Euro zone, developments in negotiations between Greece and its creditors will continue to influence the trend in currency markets.
Pound Sterling – UK Markets
As widely expected, the BoE yesterday announced its decision to keep interest rates on hold at a record low of 0.5% and also maintained its quantitative easing programme at £375.00 bn. The central bank issued no statement post the announcement, but the reason for its latest decision could be attributed to weak inflation scenario in the nation and subdued wage growth. Following the announcement, the Pound traded higher against both the Euro and the US Dollar yesterday, thereby maintaining its post-election rally momentum.
The BRC, in its report today, indicated that total retail sales for April fell the most in two years, following a surge in March sales due to Easter holidays. Additionally, the just released Britain’s industrial data showed that production during the end of the first quarter rebounded, led by an increase in oil and gas extraction. Following the upbeat release, Sterling has gained traction against the US Dollar. Moving ahead, the NIESR’s growth estimate for three months to April, due later today, will attract maximum market attention.
US Dollar – US Markets
The US Dollar is trading on a weaker footing against the Euro this morning. After a light calendar day yesterday, the pace of US economic releases picks up for the week ahead. Later today, market participants will keep a track on US macro indicators, including NFIB’s business optimism index and JOLTS survey on job openings in the US. Today’s data on small business sector is expected to show a slight rebound in optimism last month after the index slipped to a nine month low for March. Additionally, JOLTS job openings survey will provide yet another viewpoint on the US labour market. Also, the US government is scheduled to release its monthly budget statement of receipts and outlays for the previous month later today.
The US Dollar remained in a tight range against the Euro in yesterday’s trading session, as investors focused on talks between Greece and its creditors regarding further aid to the cash strapped nation.
Euro – European Markets
Recovering from its previous session losses, the Euro has edged higher against the major currencies this morning. The shared currency regained lost ground against the US Dollar, as Greece confirmed that it will repay its €750 million debt repayment to the IMF, following a Euro group meeting yesterday. However, gains witnessed in the Euro-US Dollar currency pair is likely be tested as negotiations continue to drag on without conclusion. The Euro zone officials after the meeting yesterday reportedly welcomed the progress that was made in negotiations between Greece and its international creditors. However, the finance ministers noted that additional time and work was needed to resolve few remaining issues. In the absence of macro indicators in the Euro region today, investors will eye the preliminary reading of the Euro zone’s first quarter GDP reading and industrial production data, scheduled tomorrow.
The Euro lost ground against the majors yesterday, amid renewed concerns of Greece defaulting on its repayments and subsequent exit from the Euro bloc.
Other Currencies – Highlights
The Australian Dollar moved above the 0.79 mark against the US Dollar this morning after data showed that the number of home loan approvals in Australia surpassed market expectations in March, as home buyers took advantage of lower borrowing rates and robust growth in house prices. The housing data came in strong due to an increase in loans to purchase new dwellings. Going forward, market participants expect the latest interest rate cut by the RBA to provide a further push to demand for loans. Moving ahead, investors will shift their focus towards the Australian 2015/16 federal budget scheduled in a few hours. Also, market participants will eye the NFIB business optimism index and monthly budget statement in the US, due later today, for further direction to the currency pair.
Yesterday, the widely watched monthly survey by the National Australian Bank showed that Australia’s business confidence remained unchanged for April, signalling that optimism levels have not picked up despite the central bank’s continued efforts to spur growth in the economy.