Euro zone’s Consumer Price Data in Focus
On a busy economic calendar day in the Euro region, major focus will be on the flash consumer price index (CPI) reading scheduled for release later in the day along with the region’s unemployment rate. Earlier in the session, data showed that German retail sales unexpectedly dropped in March. Separately, consumer spending in France unexpectedly ticked up for the same month. Also, French core consumer prices indicated small growth for April, in line with market estimates. The just out data in the UK showed that mortgage approvals unexpectedly dropped in March, while the nation’s net consumer credit rose above estimates for the same month.
Across the Atlantic, investors will eye personal income and spending data along with the final print of the University of Michigan Consumer Sentiment Index indicating consumer confidence in the nation’s economic activity. Also on tab will be a report by ISM-Chicago stating business conditions across Illinois, Indiana and Michigan.
Pound Sterling – UK Markets
The just published data showed that Britain’s mortgage approvals fell in March, while net lending to individuals showed an unexpected uptick during the same month. Going ahead, the Bank of England’s Monetary Policy Committee member, Sir Jon Cunliffe, is scheduled to speak at an event in Brussels.
Earlier during the session, a survey by GfK showed that British consumer morale worsened more than expected to its lowest level since December 2014, as households became gloomier about the nation’s economic outlook amid uncertainty surrounding the upcoming European Union referendum. Consumer confidence dropped in all the areas measured: namely in their personal financial situation, view of the UK economy and whether now it was a good time to make big purchases. A separate poll today also pointed towards waning business confidence in April. Lloyds Bank's Business Barometer indicated that there was a sharp rise in the number of companies that gave a pessimistic view about the economy. Adding on to that, companies were also less upbeat about hiring new staff.
US Dollar – US Markets
The greenback traded lower against its peers in yesterday’s session, after data showed that US first quarter GDP advanced at its slowest pace in two years, making the June interest rate rise look like a distant dream. A sharp pull back in business investment coupled with weak global demand dragged down an already torpid US economy in the initial months of 2016. Nevertheless, a robust housing sector kept the nation from sliding further into the trough. Interestingly, it brought a sense of déjà vu as this has historically been quite a common scenario in the US, with GDP growth coming in weak in the first quarter and rebounding in the second. On the other hand, the number of weekly jobless claims in the US hovered near four-decade lows. The contradiction of a robust jobs market with tepid GDP growth has put the Federal Reserve in a quandary over the future interest rate rise.
Moving ahead, today’s data release will encompass US personal spending and personal income data, along with Chicago PMI and the final print of the University of Michigan Consumer Sentiment Index.
Euro – European Markets
Earlier in the day, data showed that German retail sales dropped sharply in March, against expectations for a rebound last month, however, it failed to spark much change in the shared currency. In separate data, French consumer spending unexpectedly rose in March.
Moving ahead, investors will closely eye the first print of the Euro region’s consumer price inflation figures along with the unemployment rate data, which is scheduled for release later in the day, for further signs on the overall economic health of the Euro area. The Euro zone’s flash core consumer price index (CPI) is anticipated to slightly decline in April, hinting that the index might remain well below the European Central Bank’s (ECB) target of just below 2.0% in the long term. Consumer prices in the Euro region are likely to drop in April after remaining flat in the previous month. Yesterday’s flash April inflation reading for Germany indicated that consumer prices fell in line with market estimates.
Other Currencies – Highlights
The Canadian Dollar is trading on a stronger footing against the US Dollar today, at a level last seen in June 2015. Demand for the commodity related currency surged following the recent rally in oil prices which led to oil prices rising to its highest levels in 2016. Meanwhile, mixed economic data in the US continued to weigh on the greenback against its Canadian currency counterpart.
Going forward, major investor focus will be on Canada’s domestic growth figures for February. Data is anticipated to show that the economic growth in Canada reversed its gains from the start of the year to indicate that the economy contracted in February. However, a drop in February will only offset a part of the previous month's gain, keeping scope for the nation’s economy to grow at a quicker pace in Q1, compared to the previous month. Elsewhere, investors will also eye a slew of economic releases in the US for further direction on the currency pair.