Today’s data has shown that manufacturing PMI in the UK edged higher for March, thereby suggesting that strong demand on the local front continues to keep Britain’s industrial activity supported. Moving ahead, market participants will eye March’s construction PMI later this week and the services PMI reading next week, in the UK, to gauge the nation’s overall activity for the first quarter of 2015.

Across the Atlantic, today’s ISM manufacturing PMI report and ADP private sector employment data will keep investors interested in the latter half of the trading session. In the Euro zone, prints released yesterday showed that while the preliminary consumer price inflation remained in line with market estimates for March, the region’s unemployment rate fell less than expected for February.

Pound Sterling – UK Markets

The just out Markit print has shown that activity in Britain’s manufacturing sector expanded at a firmer pace for March. With strong local demand already keeping UK’s production activity supported, possibility of a downside in Britain’s manufacturing activity remain limited going forward, especially considering that the ECB’s recently launched stimulus programme is expected to keep demand for UK products supported on the external front as well. Meanwhile, the Pound has shown little reaction to this print and has lost ground against the US Dollar. Moving ahead, tomorrow’s construction PMI reading along with next week’s services PMI data in the UK will attract significant attention among Sterling investors to gain an insight into the nation’s overall health for the first quarter of 2015.

Yesterday, the final GDP data released in the UK revealed that the nation’s economy grew at a faster pace than previously estimated for the last quarter of 2014, on the back of a strong growth in exports. Meanwhile, on a quarterly basis, business investments in the UK registered a fall for the fourth quarter of 2014.

US Dollar – US Markets

The US Dollar is trading on a firmer footing against the Pound this morning, ahead of the release of the ISM manufacturing data and ADP nonfarm employment change, which are expected to provide further insight into the strength of the US economic recovery. Recently, growth in the manufacturing sector has been decelerating and today’s ISM survey data is expected to show that US manufacturing continued to expand but at a slower pace from February. With labour conflicts settled at the country's busy West Coast ports, it will be interesting to see whether job addition figures come in above expectations. The ADP data will act as a preview to Friday’s key release of non-farm payrolls report. The US Fed Chairperson, Janet Yellen, had last week hinted that labour market conditions are likely to improve further in the coming months.

The US Dollar traded higher against the Euro yesterday, after data showed that consumers’ optimism in the nation’s economic activity as measured by the Conference Board surprisingly rebounded strongly for March. This is in sharp contrast to the recent reading of the University of Michigan’s index of consumer confidence, which slipped for March.

Euro – European Markets

The Euro lost ground against the US Dollar yesterday, after data showed that the unemployment rate in the Euro zone fell less than market expectations for February. The preliminary print on consumer prices in the Euro zone for March indicated that while annual inflation continued to remain in negative territory for the fourth consecutive month, the extent of deflation eased in line with consensus estimates. However, core rate declined from the previous month, reinforcing expectations that the region’s central bank would keep pushing its easing policies to drive growth and inflation.

After reversing its earlier session losses, the Euro is currently trading higher against its key peers. The final print of the Markit manufacturing PMI for the Euro zone beat expectations and indicates recovery in the region’s economy, as demand for the nation’s goods increased partly helped by a weaker Euro. Final manufacturing PMI’s for March for the key economies of Germany, France and Italy all came in above expectations and reinforced perceptions of a broad based recovery in the region.

Other Currencies – Highlights

The Japanese Yen has edged higher against the US Dollar in early Asian trade. Meanwhile, traders shrugged off the Bank of Japan’s Tankan survey estimates of business sentiment of large manufacturers for first quarter of the new year. Sentiment among Japan’s big manufacturers remained steady from the previous quarter, falling well short of markets expectations as weak demand for goods weighed on their confidence. Moreover, the survey showed that manufacturing activity is expected to worsen in the second quarter. However, data indicated that service sector sees business activity improving in the first quarter, benefitting by lower oil costs and a surge in inbound tourism.

Following the BoJ Tankan survey estimates, the final print of the Nomura/JMMA manufacturing PMI was released which provided a further cues on the state of manufacturing activity in the nation for March. The print indicated that Japan’s manufacturing activity expanded slower than previously estimated due to contraction in domestic orders. These survey results signal that recovery in the economy is losing momentum and hints at the possibility of further easing by the BoJ.