Industrial Production in the UK Drops
Today’s industrial production report revealed that output among UK producers fell surprisingly for January, in contrast with the same month’s robust manufacturing PMI reading. However, the Pound has continued to trade on a firmer footing against the Euro following the release of today’s data. Later today, traders will eye the NIESR’s projection on Britain’s GDP for the three months ended February.
The ECB President, Mario Draghi, in a speech earlier today expressed confidence in the recently launched quantitative easing programme and hinted that these measures will help bring the region’s inflation close to the 2% target. With no crucial macro triggers across the Atlantic today, market participants will shift their focus to tomorrow’s retail sales report to gauge the health of domestic spending for February.
Pound Sterling – UK Markets
The just out data has shown that industrial production in the UK fell unexpectedly for January, in contrast with the same month’s upbeat manufacturing PMI reading. Although today’s data indicates signs of softness in industrial activity, prospects of a further downside in the pace of domestic activity remain limited, especially considering that the ECB’s recent stimulus measures are likely to keep Britain’s manufacturing activity supported. The Pound has dropped against the greenback this morning following the disappointing production data. Moving ahead, investors will keep a tab on the NIESR GDP forecast for the three months ended February to ascertain growth trends in Britain’s economy, particularly amid muted inflation in the country.
Yesterday, Mark Carney offered no fresh insight into the BoE’s view towards the timing of an interest rate rise in the UK. He stated that it would be “extremely foolish” to add more stimulus in the UK to boost the nation’s inflation, especially considering that the weakness in Britain’s consumer price growth is mainly due to the low oil prices.
US Dollar – US Markets
The US Dollar traded higher against the single currency in yesterday’s trading session, as expectations of an imminent increase in interest rates continued to boost the greenback. The US Dollar has remained broadly supported, following last week’s employment report. Additionally, the greenback continued to gain momentum after hawkish comments from a few US Federal Reserve officials. FOMC member, Loretta Mester reiterated that she is comfortable with the Fed raising interest rates in the first half of 2015 and the outgoing Dallas Fed President, Richard Fisher reaffirmed his preference for an early rate rise. On the macro front, data released yesterday showed US wholesale inventories rose unexpectedly for January. Another report showed that NFIB’S small business optimism index edged higher for February, while JOLT’s job openings showed an increase in employment opportunities in the US for January, though both readings trailed expectations.
The greenback is trading higher against the Euro and the Japanese Yen this morning. Going forward, investors will anticipate the US retail sales figures, due tomorrow, for further direction.
Euro – European Markets
The Euro has lost ground against most of its major counterparts this morning. In a speech earlier today, the ECB President, Mario Draghi, expressed confidence in the recently launched stimulus measures and hinted that this programme is likely to fend off deflationary headwinds in the region. Going forward, traders will eye further talks between Greece and its international creditors which are set to resume today in Brussels. On Monday, Euro zone officials had rejected Greece's proposed reform measures that are seen as a prerequisite for extension of funding to the debt-ridden nation. Meanwhile, the just released current account data from France showed deficit for January was lower than the previous month.
The single currency traded lower against the major currencies in yesterday’s trading session, following the start of the bond buying programme by the ECB this week. Additionally, the macro data released from the Euro zone yesterday showed that, on a month-on-month basis, industrial production in France rose surprisingly, while in Italy the output fell for December.
Other Currencies – Highlights
The Australian Dollar is trading lower against the greenback this morning. Earlier, the Reserve Bank of Australia's (RBA’s) assistant governor, Christopher Kent stated that the domestic currency was high relative to the condition of the country's economy, despite the recent fall in the Aussie. He added that the currency’s sharp drop since the highs in 2013 is helping the nation’s economy to adjust. He revealed that the lower exchange rate would help in increased spending on goods produced in the nation and also support the tourism and education sectors as they become more cost competitive.
The Australian Dollar’s downward trend against the US Dollar was supported by a decline in the Westpac consumer confidence index for March. Data related to the housing sector in Australia showed that home loan approvals and lending for housing investment fell more than market expectations for January.