Investors Await ECB Meeting Minutes
Investors will closely watch today’s publication of the minutes of the European Central Bank’s (ECB) monetary policy meeting held in March. Also on tab will be a speech by the ECB President, Mario Draghi. Meanwhile, the UK economic calendar remains light for a successive second day. The only data release in the UK showed that Britain’s house prices rose sharply higher than estimated in March.
Across the Atlantic, market participants eagerly await a speech by the US Federal Reserve (Fed) Chair, Janet Yellen, which might provide further hints over the central bank’s stance on the interest rate path for this year. On the economic data front, the number of persons applying for first-time unemployment benefits in the US and the change in the amount of money borrowed by individuals will be eyed by investors.
Pound Sterling – UK Markets
The Pound has lost ground against the greenback and the shared currency this morning after the US equity markets rebounded and as commodity prices gained slight momentum. Meanwhile, the volatility in trading in the Pound - US Dollar currency pair is anticipated to increase as the referendum on Britain’s exit from the European Union (EU) approaches in a couple of months. Nevertheless, the UK Prime Minister, David Cameron’s recent campaign to caution voters against the fallouts of leaving the EU seems to be working as a survey poll indicated that more voters are now voting to “remain” in the EU.
Data published earlier today showed that house prices, reported by Halifax, rebounded in March, taking cues from this week’s upbeat housing releases, including Nationwide’s house prices and UK construction PMI. Going forward, the GDP estimate for March by the National Institute of Economic and Social Research along with the British manufacturing production and trade data, due tomorrow, will be eyed by investors.
US Dollar – US Markets
The US Dollar traded on a weaker footing against most of its key currency counterparts yesterday following the publication of the minutes of the US Federal Open Market Committee meeting held in March. The minutes indicated that there was a divergence in the opinion of several key Fed officials as some anticipated a rate increase in the central bank’s upcoming policy meeting this month, while others recommended exercising caution. However, a rate increase can be expected in June and December this year after US policymakers stated that the central bank would raise its key interest rates twice this year as they expect global economic headwinds to gradually subside. Meanwhile, in economic news, weekly data showed that the number of mortgage applications in the US rose for the first time in four weeks.
Later today, a speech by the Fed Chairwoman, Janet Yellen, will attract significant market attention as investors will look for further clues on the anticipated interest rate path for 2016. Also on tab will be US initial jobless claims data along with consumer credit change data for further direction in the US Dollar against its peer currencies.
Euro – European Markets
The Euro is trading lower against most of its key counterparts this morning ahead of the publication of the minutes of the ECB’s March monetary policy meeting later today. The details of the central bank’s latest gathering which follow yesterday’s dovish minutes by the FOMC, are likely to fuel speculations that the central bank is willing to spur the economic growth outlook in the Euro region by announcing additional monetary stimulus measures. Currency traders will also examine the minutes for any potential signs of policy divergence, both between the ECB and its US counterpart and within the ECB. Also, a speech by the ECB President, Mario Draghi, will attract significant market attention.
Earlier this morning, the shared currency trimmed some of its gains against its US counterpart following the release of French trade data which showed that the trade deficit in the second largest economy of the Euro zone widened in February, recording the biggest deficit since August 2014. The widening of the French trade deficit resulted from a surge in delivery of inputs for the French car and aerospace industries, while its overall exports declined in February.
Other Currencies – Highlights
The Australian Dollar has reversed its gains against the US Dollar and has breached below the crucial 0.76 mark this morning. Earlier today, the Australian Dollar was trading on a firmer footing as strong gains in oil prices, a recovery in global equity markets, and upbeat services data in its largest trading partner nation supported gains in the local currency. Meanwhile, yesterday’s publication of the minutes of the US FOMC meeting also continued to apply downward pressure on the greenback; this is after uncertainty over the timing of interest rate increases for this year persisted amid mixed opinions of various key Fed officials. However, earlier today, data showed that Australia’s construction sector continued to contract for a fourth consecutive month in March and at its fastest pace since February 2015.
Later today, investors will closely follow a speech by the US Fed Chair, Janet Yellen and a couple of economic releases including the initial jobless claims and consumer credit change for further direction in trading in the Australian Dollar - US Dollar currency pair.