Hiring Pace in UK Remains Solid
The just out employment data has shown that hiring pace in Britain remained solid and growth in domestic wages, albeit weaker than anticipated, continued to outpace weak inflation in the nation. Separately, the minutes of the BoE’s most recent policy meeting revealed that officials unanimously voted in favour of maintaining the central bank’s current policy stance.
Across the Atlantic, the US Fed is set to wind up its two day policy meeting later today, where the post meeting statement will be scrutinised to ascertain if the central bank drops its promise to remain “patient” in raising rates. In the Euro zone, yesterday’s ZEW survey showed that morale among domestic investors improved less than expected for March, amid concerns about Greece’s standoff with its international creditors.
Pound Sterling – UK Markets
The just out labour market report has shown that the number of job additions in the UK remained solid. However, the Pound has lost ground after growth in domestic wages, though higher than Britain’s inflation, rose less than anticipated for the three months ended January. The print revealed that the unemployment rate in the country remained unchanged for the quarter. However, considering that the spare capacity in the labour market continues to decline at a robust pace, today’s mostly upbeat employment data is likely to give the BoE policy hawks more ammunition going forward. Separately, the minutes of the central bank’s latest policy meeting showed that officials unanimously voted in favour of maintaining the BoE’s current policy stance, however, members of the MPC remained divergent in their view towards the timing of an interest rate rise in Britain. Going forward, with the US Fed set to conclude its two day policy meeting later today, investors will scrutinise the post meeting statement for further direction.
Yesterday, Sterling traded on a weaker footing against the majors amid no notable macro triggers in the UK.
US Dollar – US Markets
The US Dollar is trading on a firmer footing against Sterling this morning ahead of the outcome of the FOMC meeting today. With the US Fed set to wind up its two day policy meeting, market participants will keep a tab on the post meeting statement to see if the central bank drops its pledge to remain “patient” in raising interest rates. A hawkish tone in today’s publication is likely to strengthen the case for a rate rise in 2015. However, with low oil prices and an elevated US Dollar stoking fears of disinflation in the economy, the central bank could possibly be inclined to maintain its current policy stance. Additionally, the Fed is scheduled to release its latest projections on the economy. Considering that the central bank lowered its personal consumption expenditure forecast in December, investors will look for any further downside in today’s estimate, given the subdued inflation environment in the US.
Yesterday, the greenback recovered some of its early session losses against the Euro. Among noteworthy economic releases, data showed that housing starts registered a sharp decline, while the number of building permits rose more than expected last month.
Euro – European Markets
This month’s ZEW survey released yesterday showed that morale among German investors improved to its highest level since March 2014. Sentiment among domestic traders remained buoyed especially after the ECB commenced its massive asset purchase programme, although concerns about Greece and the nation’s conflict with its international lenders weighed on optimism. Meanwhile, the Euro gained ground against the greenback yesterday and crossed the 1.06 mark. However, the Euro failed to hold on to its gains against amid speculation that the US Fed might offer hints of a sooner than expected interest rate rise in the US, in its post meeting policy statement today.
The common currency is trading in a tight range against the Pound this morning. Data scheduled in Euro zone is expected to show that trade surplus in the region narrowed for January, after December’s surplus reached a multi-year high. Considering that a weaker Euro continues to boost exports from the region and cheaper oil continues to lower the Euro zone’s import bill, an upside surprise in today’s trade report cannot be ruled out.
Other Currencies – Highlights
The Japanese Yen showed little reaction to the overnight trade data in Japan and remained range bound against the greenback. The report showed that trade deficit in the nation narrowed more than expected for February as weak oil prices lowered the cost of imports. The improvement in the deficit was capped by a softness in export volumes. Separately, the BoJ’s latest monthly economic survey released earlier today hinted that the weakening trend in domestic household spending has started to bottom out and industrial production in Japan is likely to pick up going forward, especially amid strengthening demand at both home and abroad.
With no other macro triggers on the domestic front, the policy statement of the US FOMC meeting will be noted today for further direction in the US Dollar-Japanese Yen pair. Moving ahead, the minutes of the BoJ’s most recent policy meeting will attract significant attention among market participants tomorrow.