Consumer Morale Held at 12-Year High
The GfK consumer confidence survey indicated that consumer morale in the UK remained at a multi-year high. However, a survey by CBI revealed that growth in retail sales volume surprised on the downside for April. With no major domestic indicators today, the Pound is likely to be influenced by global macro news.
The initial estimate of the US GDP data showed that growth slowed for the first quarter. The FOMC, in its latest monetary policy statement, indicated that US Fed officials were confident of achieving its desired inflation target over the medium term and indicated that the recent slowdown appears transitory. In the Euro zone, inflation and unemployment data, scheduled later today, will attract market attention.
Pound Sterling – UK Markets
The Pound edged higher against the US Dollar in yesterday's trading session. GfK, in its monthly survey, indicated that consumer morale in the UK remained steady at the highest level in more than 12 years for April. The survey however showed that consumer confidence failed to improve from the previous month, giving mixed signals as the nation heads for the general election. Consumers’ optimism could be attributed to growing wages and lower inflationary pressures in the nation. In other news, Britain's house prices topped market expectations for April, while rising to the highest level since June 2014. Meanwhile, the latest CBI distributive trade survey indicated that growth in retail sales volume slowed unexpectedly for April. Data showed that most retail sub-sectors reported rising volumes, but growth was held back by a fall in the groceries sector.
Sterling is trading on a weaker footing against the Euro this morning, on a quiet day in terms of economic releases in the UK.
US Dollar – US Markets
The US Dollar nudged lower against a basket of major currencies yesterday after data showed that the nation’s economic growth slowed to a meagre pace for the first quarter. The initial estimate of first quarter GDP data was weighed down by factors such as a harsh winter that curbed consumer spending, a drop in investments and weak exports due to a strong US Dollar. The Fed’s latest policy statement attributed the softness of recent economic data to transitory factors. Meanwhile, the Fed held its interest rate and indicated that it was confident that inflation would move towards its desired target over the medium term. In other news, pending home sales in the US climbed higher than market expectations for March.
The US Dollar is trading close to yesterday’s lows against its key peers this morning. Today, data on personal consumption and claimants for weekly jobless benefits will attract market attention in the US.
Euro – European Markets
The Euro has sharply moved higher against the US Dollar after data earlier today showed that the Spanish economy expanded at a faster than expected pace in the first quarter. Traders are likely to keep an eye on upcoming European economic news, with flash consumer price inflation and unemployment from the Euro area slated for release in a few hours. Data released earlier today revealed that monthly retail sales in Germany fell more than expected for March, extending the decline seen in the earlier month. Separately, Germany’s unemployment rate for April remained unchanged. For the day ahead, inflation and unemployment figures for the Euro zone are expected to offer encouraging signals, possibly suggesting that the ECB’s stimulus measures are having a positive impact.
The Euro traded higher against its major peers yesterday. In macro news, yesterday’s data showed that sentiment in the Euro zone economy weakened slightly for April, but business morale improved for the same period. Additionally, the flash annual inflation reading in Germany continued to rise for April, easing deflationary concerns.
Other Currencies – Highlights
The Japanese Yen traded higher against the US Dollar in the mid-Asian session. In its latest monetary policy meeting, the BoJ policy setters voted in majority to keep its key interest rate steady at 0.1% and its asset purchases programme unchanged. Additionally, the central bank cut its inflation and growth forecasts in its outlook statement for the fiscal year 2015. The BoJ Governor, Haruhiko Kuroda noted a continued moderate trend in the nation’s economic recovery, amid hopes that rising wages will boost spending and the BoJ will eventually achieve its desired inflation target. In other economic news, Japan’s construction orders increased sharply for March and housing starts recovered better than market estimates for March.
Moving ahead, market participants will keep a tab on the consumer price index and unemployment rate for March, due later today. The core inflation measure, excluding the effects of fresh food, is forecasted to have slightly increased for March, while the jobless rate is expected to remain unchanged from the previous month.