Euro zone Consumer Confidence Data in Focus
Today, figures depicting the mood of consumers and businesses from the Euro zone are on tab along with consumer prices data in Germany. Of late, the economic sentiment index has shown a declining trend, partly due to the financial turmoil witnessed at the start of the year. Investors will closely monitor today’s sentiment reports from the Euro zone to see whether the mood continues to deteriorate in March. Markets will also look forward to German inflation data as expectations are for consumer prices to rise annually after staying flat in February.
Across the Atlantic, the ADP employment data for March, due later today, will give an early indication of what to expect from the official US jobs report which is scheduled for release on Friday.
Pound Sterling – UK Markets
The Pound has managed to maintain its previous session gains against the greenback this morning. In the absence of noteworthy economic releases in the UK today, trading in the Pound against its peer currencies will continue to be influenced by news related to the referendum on Britain’s membership in the European Union (EU). Yesterday, the Bank of England’s (BoE) latest financial policy committee echoed recent remarks by the central bank Governor, Mark Carney, that the upcoming referendum poses a significant amount of risks to financial stability. Also, a recent poll in the UK showed a change in voting pattern from earlier surveys as there was a reduction in public opinion who favoured to stay in the EU. Moving ahead, there will be a single release in the UK later today, which is the GfK Group Consumer Confidence Index. Expectations are for the survey report to show that consumer confidence in the UK turned negative for the first time since November 2014.
Tomorrow, the release of fourth quarter domestic growth data and a speech by the BoE Governor will attract significant market attention.
US Dollar – US Markets
The US Dollar nudged lower against most of the majors yesterday as dovish comments by the Federal Reserve (Fed) Chairperson, Janet Yellen, suggested that an interest rate rise in April is unlikely, and also heightened doubts that the central bank will be ready to move in June. The Fed Chair emphasised that the central bank would adopt a cautionary stance in raising interest rates. She also stated that the Fed might consider policy easing if it is needed to boost the economy. Janet Yellen’s dovish remarks were hardly surprising, but it was in contrast to some of her colleagues who last week suggested another tightening may be around the corner.
Moving ahead, investor focus will be on today’s ADP employment data which comes ahead of this week’s jobless claims and non-farm payrolls report. Lately, numbers from different corners of the US labour market have painted a positive picture. Although today’s update for private payrolls is expected to be slightly below February’s unexpected advance, the corporate payrolls numbers for March will still draw a healthy picture of the US jobs market.
Euro – European Markets
The shared currency continues to trade higher against the greenback this morning on the back of broad based weakness in the US Dollar. In economic news, a series of important sentiment data are scheduled for release in the Euro zone, in a short while. Last week, the preliminary reading of the Euro zone’s consumer confidence had unexpectedly dipped to its lowest level in over a year for March. If today’s update on sentiment in the European business community follows suit, the negative momentum will hint to a weak trend brewing for 2016. However, the previous week’s flash data for the Euro zone’s composite PMI index had ticked higher for the first time in 3 months, suggesting that the economy is on course to recovery in the first quarter. This might replicate in today’s sentiment data in the consumer and business sectors and paint an optimistic picture of the Euro zone economy.
Also on tab will be the preliminary German inflation data for March, due later today, which is anticipated to show a rebound in consumer prices on the back of recent stabilisation in oil prices.
Other Currencies – Highlights
Today, the Swiss Franc extended its earlier gains against the US Dollar after a survey data by the UBS investment bank showed that Swiss consumption modestly improved in February, while the retailer sentiment index was revised lower for the start of the year. Data indicated that there was consistent and robust growth in the nation’s private consumption, and continued strong demand for automobiles pushed the UBS consumption indicator higher for February. Additionally, results of a survey by the KOF Swiss Economic Institute for March published earlier today, signalled continued positive development for the Swiss economy in the coming months, largely on the back of private consumption.
Amid the absence of domestic economic releases for the day, further trading in the US Dollar - Swiss Franc currency pair could be influenced by private payrolls data, scheduled in the US, later in the day. Looking ahead to the final session of this week, investors will keep a tab on Switzerland’s retail sales and manufacturing PMI data, for further insights to gauge the state of the economy at the end of the first three months of 2016.