British Buyers are Borrowing Less
The global economic calendar is crammed with economic releases today. Starting with Britain, the just out data showed that consumers slowed the pace of borrowing in December for the first time in five months. Moreover, UK mortgage approvals rose less than expected last month.
Meanwhile in Germany, the unemployment rate dropped to a record low in January. Going ahead, investors look forward to updates on the Euro zone gross domestic product (GDP) for the fourth quarter and the flash January estimate for consumer price index (CPI). From the US, S&P Case-Shiller house price index, Chicago PMI and consumer confidence index are on the cards for today. Additionally, the Federal Reserve’s (Fed) 2-day monetary policy meeting kicks off today. Apart from all this, Trump headlines continue to hog the limelight.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against its major counterparts this morning. Fresh out data from the UK revealed that net consumer credit eased for the first time in five months in December. Moreover, the nation’s mortgage approvals advanced less than expected in the same month. Earlier in the session, UK’s GfK consumer confidence index improved for December. However, it remained in the negative territory, as continued uncertainty arising out of Brexit weighed on investor sentiment. Meanwhile, Lloyds’s business barometer declined in January, its largest monthly drop since August. There are no other economic releases scheduled on the UK data calendar today. Separately, British MP’s will begin Brexit discussions in Parliament today.
Traders now move attention to the Bank of England’s (BoE) interest rate decision and meeting minutes scheduled ahead in the week. The central bank is broadly anticipated to stand pat on monetary policy. However, attention will mainly be directed towards the BoE’s quarterly inflation report.
US Dollar – US Markets
The greenback ended lower against most of its major peers yesterday, amid the US President, Donald Trump's hardening defence over his immigration policies. On the data front, US consumer spending advanced in December, backed by strong year-end car sales and higher utility spending, indicating sustained domestic demand in the nation. However, personal income registered a modest growth in comparison to spending, thus reducing the share of savings among Americans. Separately, a key measure of US inflation posted its fastest annual gain in over 2 years last month, but remained shy of the central bank's target. In other economic news, a report by the National Association of Realtors showed that contracts to purchase previously owned US homes rebounded in December. The increase possibly indicates that more people are scrambling to buy homes as mortgage rates are rising.
The Fed’s 2-day monetary policy meeting kicks off today. Apart from this, investors look forward to the release of the US consumer confidence, Chicago PMI and home price index, all of which are due later in the day.
Euro – European Markets
The Euro is trading higher against the greenback this morning. Data released earlier in the session showed that German unemployment rate fell to an all-time low of 5.9% in January. On the other hand, the nation’s retail sales surprisingly declined in December. Meanwhile, the French economy advanced during 4Q 2016, buoyed by robust consumer spending and a sharp rebound in business investment. Moreover, preliminary reading of the nation’s CPI rose above expectations in January. Moving ahead, market participants await the release of some key data points from the Eurozone. These include the region’s unemployment rate, CPI and flash fourth quarter GDP data.
Yesterday, investors witnessed a slew of economic releases from the Euro region. Data revealed that rising oil prices helped propel Germany's annual inflation rate for January to its highest level since
mid-2013. This latest development is most likely to amplify calls from the region’s powerhouse economy to put an end to the European Central Bank’s ultra-loose monetary policy. Separately, economic confidence in the Euro region strengthened to a 6-year high in January.
Other Currencies – Highlights
The Bank of Japan (BoJ), in a widely-expected move, maintained the benchmark interest rate at -0.1% at its latest monetary policy meeting. Moreover, it also vowed to continue with its yield curve control programme as long as deemed necessary. In its outlook report, the central bank upgraded Japan’s GDP forecast for the current and next fiscal year. Further, the central bank expects consumer prices to hit the BoJ’s 2.0% target by 2018. However, it refrained from raising its core consumer price inflation outlook for the coming year.
In economic news, the nation’s housing starts advanced at its slowest pace in four months in December, while construction orders rebounded during the same month. Earlier in the session, data showed that Japan’s unemployment rate remained steady at 3.1% in December. Additionally, the nation’s industrial output rose for the second consecutive month in December, as demand for Japanese exports picked up pace in global markets. Meanwhile, overall household spending dropped for the 10th straight month in December.