Britain’s Trade Deficit Broadens
The just released data has shown that Britain’s trade deficit widened for February as a lower oil import bill failed to offset the impact of a stronger pound on the nation’s exports. Later today, the BoE is scheduled to hold its policy meeting, however, with the central bank anticipated to maintain its current policy stance, today’s gathering is unlikely to attract much attention among Sterling investors. Separately, today’s German trade report showed a wider surplus for February on the back of a rise in exports from the nation.
Across the Atlantic, the minutes of the US Fed’s latest policy meeting revealed that officials remained divided over the timing of an interest rate rise, however, most policymakers were in favour of tightening the central bank’s stance later this year.
Pound Sterling – UK Markets
The just out data has shown that trade deficit in the UK widened more than expected for February despite cheaper oil prices continuing to lower the nation’s oil import bill. Considering that the Euro bloc is a crucial trading partner of Britain, the recent surge in the Pound-Euro pair weighed on the country’s exports for the month. The Pound has continued to trade on a weaker footing against its key counterparts this morning following the release of today’s data. Later today, focus among investors is likely to remain on the BoE’s policy meeting where officials are anticipated to vote in favour of maintaining the central bank’s current policy stance. Moving ahead, tomorrow’s official UK industrial production report will be eyed for further direction.
In yesterday’s trading session, Sterling pared its early session gains against the US Dollar and fell below the 1.49 mark. The BoE in its credit conditions survey revealed that demand for secured lending for home purchases and credit card lending from households in the UK reduced for the first quarter of 2015, while loans borrowed by large corporates increased for the quarter.
US Dollar – US Markets
The US Dollar edged higher against most of the majors yesterday and recovered part of its losses after the release of the minutes of the US Federal Reserve’s latest meeting. The minutes showed that policy makers were split over raising interest rates in June, but the majority favoured raising rates later this year. With no significant economic releases yesterday, speeches from two voting members of the FOMC attracted attention. The US Fed Governor, Jerome Powell, stated that the Fed should wait longer to raise its benchmark rate and look for more proof that labour markets are tightening, or other supply-side constraints are binding. On the other hand, New York Fed President, William Dudley, indicated that he sees the Fed raising rates in June, assuming that housing and inflation data improves. He added that markets should not be too alarmed by last week’s labour market data.
The US Dollar is trading higher against the Euro this morning. Market participants are likely to keep a tab on the weekly update of initial jobless claims, due today.
Euro – European Markets
The Euro is trading lower against the greenback this morning, despite data released earlier in the day signalling that growth in Europe’s largest economy is gaining strength. However, the shared currency has strengthened against the Pound after data showed that German industrial production rose more than market expectations for February amid an increase in production of energy and capital goods. Separately, trade surplus in Germany was slightly better than anticipated for February, as exports advanced at a stronger than expected pace during the period. Meanwhile, investors will continue to track developments in Greece as the country faces today’s deadline to make a €450 million payment to the International Monetary Fund.
Investors turned cautious during yesterday’s session after German factory orders missed expectations for the second month, in contrast to today’s upbeat releases. Also, Euro zone retail sales moved into negative territory for March. Towards the latter half of yesterday’s trading session the EUR/USD pair slipped well below the 1.08 mark following release of the FOMC minutes.
Other Currencies – Highlights
The Canadian Dollar lost ground against the US Dollar yesterday following a sharp decline in oil prices, after a report indicated that US crude oil inventories surged to its highest level since March 2001. The greenback moved towards the 1.25 mark against the Canadian Dollar, after the US Fed’s latest policy meeting minutes revealed that US policy makers were split over raising interest rates in June.
Market participants will keep a tab on the building permits data from Canada today, for cues on demand in the nation’s housing market. Traders expect the number of building permits to rise for February, after having plunged for the previous month. Separately, data is expected to show that new house prices in Canada remained largely unchanged for February. This follows a contraction for January, following five straight monthly increases. The currency is expected to remain pressured against the US Dollar, ahead of tomorrow’s Canadian unemployment report.