Mortgage Growth in the UK Remains Buoyed
Today’s BBA survey has revealed that the number of mortgages approved by UK banks increased more than expected for February. Moving ahead, market participants will eye the retail sales report in the UK scheduled for tomorrow to gauge the health of domestic spending for February, especially after the release of yesterday’s mixed inflation data in Britain.
Across the Atlantic, after yesterday’s upbeat inflation data showed that consumer prices rose in line with estimates for February, traders will keep tabs on today’s durable goods orders print in the US for further direction to risk appetite. In Europe, today’s Ifo report showed that morale among firms in Germany improved for March.
Pound Sterling – UK Markets
The just out BBA survey has shown that the number of mortgages approved by UK banks rose more than market estimates for February, fuelling expectations that activity in the country’s housing market is regaining momentum. However, the Pound is trading in a tight range against the greenback this morning. Going forward, durable goods orders data scheduled in the US later today is likely to keep traders in the Pound-US Dollar pair interested.
Yesterday, Sterling remained under pressure against the US Dollar following the release of mixed inflation report in the UK and upbeat economic data in the US. The print showed that consumer price inflation in Britain rose in line with market estimates for February, but the core measure of domestic prices grew at a slower than expected pace last month. Against the backdrop of this report, market participants will eye tomorrow’s retail sales data in the UK to gain an insight into the health of domestic spending, particularly after Mark Carney recently hinted that a prolonged period of low inflation is likely to delay the timing of an interest rate rise in Britain.
US Dollar – US Markets
The US Dollar reversed its initial weakness and moved higher against the Euro in the latter half of the session yesterday, following the release of macro reports that provided encouraging signals. A string of recent economic data had indicated that the world’s largest economy was losing momentum. However, data released yesterday showed that consumer price inflation picked up steam for the first time in four months for February, reflecting a rebound in gasoline prices. The Federal Reserve officials have long viewed the energy-driven weakness in prices as transitory and February's firmer readings were in line with policymakers projections that inflation would move back to the central bank's desired target rate. Furthermore, a preliminary print showed that manufacturing activity improved for March as the effects of harsh winter weather eased and the work activity at West Coast ports improved.
The US Dollar is trading in a tight range against the majors this morning, ahead of the release of February’s durable goods orders report later today. Market participants expect a slowdown in total orders growth, after having risen sharply for January due to seasonal factors.
Euro – European Markets
The Euro moved higher against the greenback in the initial trading session yesterday after preliminary data showed that manufacturing activity in the Euro zone expanded more than market expectations for March, easing concerns over the region's growth outlook. The expansion can be attributed to domestic demand for new orders, ECB’s quantitative easing programme, a weaker Euro and lower oil prices. Data also showed a continued improvement in services PMI in the Euro zone, likely suggesting a boost to private consumption from lower gasoline prices. The German services PMI also came in above market estimates for March, but the French manufacturing PMI rose less than anticipated for the same period. However, the common currency pared most of its gains against the US Dollar in the latter part of the session following encouraging economic reports in the US.
The Euro is trading marginally higher against the majors this morning, after the Ifo survey showed that confidence among German firms rose more than market expectations for February. Tomorrow, traders will eye German GfK consumer morale reading for further direction.
Other Currencies – Highlights
Data released earlier today by UBS showed that the consumption trend in Switzerland improved for February. This follows last month’s data when the indicator dropped sharply and indicated that optimism among retailers had weakened after the SNB’s surprise move to abandon the Swiss Franc cap against the Euro. Today’s data, along with last week’s ZEW expectations data for March, has raised hopes of an improvement in the Swiss economy going forward. Following the release of UBS consumption data, the Swiss Franc has shown little reaction against the greenback. Later today, the SNB will release its quarterly bulletin which could have an impact on the direction of the Swiss Franc against the majors.
Yesterday, the Swiss Franc edged higher against the US Dollar despite upbeat US macro figures. With little on the Swiss economic calendar this week, market participants will keep a watch on global economic developments for further direction.