House Prices in Britain Rise
Today’s data showed that house prices in the UK rose less than expected for March, despite a strong pace of growth in the domestic labour market and a supply constraint in the nation’s real estate segment continuing to help push up home rates. Separately, today BoE chief, Mark Carney indicated that the next move by the central bank would likely be a rise in rates. This is in line with the BoE’s earlier guidance that the low energy prices led weakness in Britain’s inflation is temporary.
Across the Atlantic, a weekly survey showed yesterday that the number of first time jobless claimants in the US eased more than expected for the previous week. Going forward, revised US GDP figures for the final quarter of 2014, along with a speech by Janet Yellen, will keep investors interested in the latter half of today’s trading session.
Pound Sterling – UK Markets
The Nationwide report released earlier today revealed that house prices in the UK rose less than market estimates for March, despite a shortage in the nation’s real estate segment continuing to push up property rates. However, with domestic wages continuing to grow firmly, prospects of a slowdown in Britain’s housing market activity remains limited going forward. In a speech, the BoE Chief, Mark Carney indicated that the next move by the central bank would likely be a rise in rates. This is in line with the central bank’s earlier guidance that weakness in Britain’s inflation, led by low energy prices, is temporary.
Data released yesterday showed that retail sales in the UK rose at a stronger than expected pace for February. Following this week’s mixed inflation print in the UK, yesterday’s upbeat retail data bought some relief to Sterling investors, especially after the print hinted that local spending continued to remain buoyed by cheaper energy costs and a sharp fall in store prices. Furthermore, retail sales got a boost from rising home purchases which increased demand for furniture and other household products in the UK.
US Dollar – US Markets
The US Dollar has nudged higher against its key peers this morning, ahead of key economic data scheduled for release in the nation today. Traders will eye the third estimate of US GDP for the fourth quarter which is expected to be slightly higher than the previous estimate. Meanwhile, concerns are already being expressed on the GDP growth for the first quarter of this year, with growth being downgraded by some leading brokers following setbacks in recently released economic data, notably manufacturing activity and durable goods orders. Market participants will keep a tab on the Reuters/Michigan Consumer Sentiment for March, due later today, for further clues about the economy’s strength. Markets will also monitor Fed Chairperson, Janet Yellen’s speech on monetary policy, scheduled today.
After trimming its early decline, the US Dollar traded higher against its major counterparts yesterday, following a report showing that initial jobless claims fell more than expected last week. Continued strength in the labour market, along with a pickup seen in last week’s core CPI data, has helped the US Dollar to recoup some of its recent losses.
Euro – European Markets
The Euro edged lower against the US Dollar yesterday, following the release of upbeat macro data in the US. Yesterday, the German Finance Minister, Wolfgang Schaeuble, expressed concern about the impact of the ECB’s monetary policy on Germany and warned of possible bubbles. Meanwhile, a survey by Gfk showed that consumer morale in Germany for April was at its highest level in over 13 years, buoyed by a weak Euro and lower energy costs. The improving economic outlook in the Euro zone’s largest economy has boosted consumer expectations and a weaker currency has increased the competitiveness of German exports. The Gfk survey followed Wednesday’s report of a better than expected improvement seen in Germany’s Ifo business confidence for March.
The Euro has moved lower against the majors this morning, amid a light day for European economic news. Data released earlier in the day showed that consumer confidence in France was in line with market expectations for March. Going forward, investors will keep a tab on the preliminary reading of consumer price inflation in Germany for March, scheduled on Monday.
Other Currencies – Highlights
The Japanese Yen traded on a weaker footing against the US Dollar in the morning Asian session, following the release of downbeat Japanese macro data. On an annual basis, Japan’s core consumer price inflation for February, adjusted for tax increases, eased for the first time in nearly two years, with the consumer-price index flat from the previous year. This has increased expectation of further possible easing by the BoJ sometime in the future to achieve its inflation target of 2%. In addition, data showed that household spending fell sharply from a year ago for February and retail sales declined more than market expectations for the same period. A rebound in export and factory output had helped Japan emerge from last year’s mild recession, but the recently released data suggest that recovery in the nation remains weak.
Traders are now focused on key US macro data, including GDP figures and consumer sentiment data, for further direction in the currency pair.