CBI Industrial Trends Data in Focus
On Friday, the Pound showed little reaction to the upbeat public sector net borrowing data in the UK. However, Sterling capitalised on the greenback’s losses in the latter half of the trading session and rose above the 1.49 mark. Today, traders will eye the CBI industrial trends survey in Britain to gain an insight into the nation’s manufacturing sector’s health for March. In the Euro zone, traders will keep a tab on the European Commission’s preliminary report which is expected to show an improvement in domestic consumer morale.
Across the Atlantic, existing home sales data for February, along with a speech by the US Fed’s Vice Chair, Stanley Fischer, is likely to keep investors interested in the latter half of today’s trading session.
Pound Sterling – UK Markets
Sterling is trading on a weaker footing against the majors this morning. In today’s trading session, a survey by the Confederation of British Industry to gauge the morale among UK manufacturers for March will be keenly eyed. Considering that the CBI reported a robust increase in orders among local producers last month, due to a surge in exports, market participants will keep a tab on today’s data for any signs of softness, particularly considering the recent strength in the Pound-Euro pair. Going forward, tomorrow’s consumer price inflation report and Thursday’s retail sales numbers in the UK are likely to attract significant attention among investors.
Sterling remained broadly range bound against the common currency in Friday’s trading session. A report released on Friday showed that public sector net borrowing in the UK rose less than expected for February, on the back of a strong income tax receipts in the nation last month. This upbeat public spending print strengthened hopes that the British Chancellor, George Osborne, might just be able to meet his borrowing targets ahead of this year’s national election in the country.
US Dollar – US Markets
The US Dollar is trading higher against the Pound this morning. Following no economic releases in the US on Friday, investors will focus on the release of existing home sales in the nation today. Market participants expect a small bounce back in existing home sales for February, following a sharp drop in the previous month. Bad weather had contributed to the prior month’s weak report, with low inventory levels and rising home prices cited as other main factors. Following today’s release, the next key housing sector release is the new home sales data on Tuesday. Traders will be keenly eyeing these releases for cues on the US Fed’s future course of action, especially as the central bank recently expressed concern about the slowdown in the US housing market.
The US Dollar traded lower against its key peers on Friday, fuelled by uncertainty over the future path of US monetary policy. Meanwhile, the Atlanta Fed President, Dennis Lockhart, stated that the US Fed might consider raising its key interest rate in its June’s, July’s or September’s policy meeting.
Euro – European Markets
The Euro is trading in a tight range against the US Dollar this morning. Trading trends in the Euro today are expected to be determined by cues from the meeting between the leaders of Greece and Germany, amid rising tensions over Greece's bailout programme. At an EU summit on Friday, German Chancellor, Angela Merkel, stated that Greece would only receive fresh funds once its creditors approve a comprehensive list of reforms that it has promised but failed to provide yet. Later today, the ECB President, Mario Draghi, will address a European Parliament committee about the progress of the central bank’s quantitative easing programme. In economic news, Euro zone’s flash consumer confidence data is up for release today. Optimism in the Euro bloc is expected to improve for March as cheaper oil has boosted spending power.
The Euro traded higher against the greenback on Friday, reversing its losses earlier in the day. The single curre1ncy was supported by upbeat Euro zone current account data which showed that surplus widened for January from the previous month.
Other Currencies – Highlights
On Friday, the Canadian dollar retreated against the greenback initially following two key macro releases before recovering with strong gains. Retail sales in Canada dropped for a second consecutive month in January due to falling oil prices. Disappointing retail sales numbers have fuelled concerns that growth in the nation may have slowed notably at the beginning of the year. Separately, February’s headline consumer prices rebounded from last month, supported by a weaker currency which has been impacted by a strengthening US Dollar notably since the end of last year. The Bank of Canada’s core inflation rate was slightly higher than the central bank’s ideal 2% target.
The Canadian Dollar is trading weaker against the US Dollar this morning, amid no major domestic economic releases. Going forward, the focus is on the Bank of Canada which had unexpectedly cut interest rates to 0.75% in January. Later this week, both Governor Poloz and Deputy Governor Lane are scheduled to deliver speeches. Investors will try to gauge whether the central bank is inclined to take further measures to boost growth in the nation.