Fears Over Greece Weaken Euro
A key domestic economic release today is the CBI Distributive Trades Survey, which will provide an early estimate of retail spending for May and cues about the economy’s performance in the second quarter. Going forward, investors will look ahead to the second estimate of UK’s first quarter GDP reading, later this week.
Meanwhile, it is going to be a busy calendar day in the US with reports on durable goods orders for April, new home sales, Conference Board’s consumer confidence index and the Markit services PMI for May, scheduled later today. In the Euro zone, developments from negotiations between Greece and its creditors are likely to dominate investor sentiment.
Pound Sterling – UK Markets
The Pound is trading lower against the US Dollar this morning, while it is trading higher against the single currency. The only key UK economic data scheduled later today is the CBI Distributive Trades survey. Going forward, the revised reading of UK’s first quarter GDP, scheduled later this week, is likely to attract significant market attention. Any change in the growth data from its earlier estimate will mostly influence Sterling’s momentum against its major currency counterparts. Additionally, in political news, the EU Referendum Bill is expected to be published as part of the Queen’s speech this week and it would be particularly eyed by Britain’s manufacturers and production firms who have been looking for clarity about UK’s relation with the rest of Europe.
Recovering from Friday’s losses, the Pound traded in a tight range against the US Dollar yesterday. It was a quiet trading session yesterday on account of a public holiday in the major economies. Sterling was pressured by the BoE Governor, Mark Carney’s dovish comments late on Friday when he indicated that the central bank has been monitoring the Pound’s strength in recent weeks.
US Dollar – US Markets
The US Dollar is trading higher against the major currencies this morning, ahead of a string of economic data on housing, consumer confidence and the service sector in the US that is likely to provide mixed results about the economy’s performance in the second quarter of this year. Today’s April report on new orders for durable goods, excluding aircraft and defense, is expected to have climbed modestly, while the headline numbers for orders is forecasted to have declined for the same month. After last week’s mixed housing data, focus will shift to today’s new home sales figures for April which is anticipated to have risen. Separately, the S&P/Case-Shiller Home Price index will also be eyed for trends on the movement of house prices. The preliminary PMI print of the dominant US services sector is likely to show a continued expansion of service activity for May, albeit a touch slower from the previous month.
Yesterday, the US Federal Reserve Vice Chairman, Stanley Fischer, stated that the central bank is expected to increase short term interest rate between 3.25% and 4.0% over the next three to four years.
Euro – European Markets
The Euro has lost ground against its key peers this morning, reflecting fears that the Greek government would be unable to arrive at a deal with its international creditors and thus triggering a default on its repaying obligations. Apart from the €300 million payment to be made to the IMF in early June, Greece also owes salaries to the public sector staff which has to be paid by this week. Additionally, investor sentiment towards the Euro was further affected by news that anti-austerity parties emerged victorious in several local elections in Spain. Separately, the European calendar looks light amid the absence of significant macroeconomic indicators in the region. Today, trading in the Euro-US Dollar currency pair will largely be impacted by economic data scheduled in the US later today. The Euro could recoup some of its losses, if US data disappoints.
Going forward, market participants will keep a tab on Euro zone industrial and consumer confidence data, due later this week, for further direction.
Other Currencies – Highlights
The Swiss Franc is currently trading on a weaker footing against the greenback, with the US Dollar having moved above the 0.94 mark against the Swiss Franc. The USD/CHF currency pair had initially fallen in yesterday’s trading session, but later the US Dollar gained traction against the Swiss Franc. This week, investors will eye key economic releases in Switzerland to gauge the performance of the Swiss economy in the first quarter of this year. Data released earlier in the day showed that the number of employed people in Switzerland was slightly higher than market expectations for the first quarter.
Going forward, Switzerland’s first quarter industrial production, scheduled later this week, is expected to attract market attention to gauge the health of the manufacturing sector in the nation.