Pound Reaches Multi Year Highs
Today’s BRC survey hinted that retail sales in the UK grew less than anticipated last month, amid the supermarket price wars and the falling food sales in the UK. The Pound is trading on a weaker footing against the greenback this morning ahead of the BoE Governor’s speech scheduled later today, eagerly awaited to ascertain if he offers any fresh insight into the timing of an interest rate rise in the UK. However against the Euro the Pound and the Dollar continue to gain as the market seems to show no sign of abating on the recent run of Euro selling.
Across the Atlantic, the NFIB survey is expected to show that morale among small firms improved for February. Meanwhile, with little on the macroeconomic front in the Euro zone, Euro investors are likely to remain on the side lines, particularly amid concerns surrounding Greece’s financial woes.
Pound Sterling – UK Markets
In a survey released earlier today, the British Retail Consortium revealed that retail sales in the UK rose less than expected for February, despite a pickup in the nation’s wage growth. A weakness in today’s retail sales gauge could be attributed to the supermarket price wars and the falling food sales in the UK. The Pound is trading on a weaker footing against the greenback this morning following the release of today’s downbeat data. Later today, Sterling traders are likely to remain focused on Mark Carney’s speech to gain any new insight into the BoE’s view towards the timing of an interest rate rise in the nation. Moving ahead, market participants will keep a tab on tomorrow’s industrial production data which is anticipated to show that the output among domestic manufacturers grew at a healthy pace for January. Additionally, the NIESR GDP forecast will be eyed to gauge UK’s economic health for the three months ended February.
In the absence of any notable macro triggers in the UK, the Pound gained ground against the greenback and rose above the 1.51 mark in yesterday’s trading session.
This morning speculation that the Pound may well be overvalued has increased as the market recorded trades on GBP EUR over the 1.40 level.
US Dollar – US Markets
The US Dollar held close to recent highs against the major currencies yesterday. In the absence of fresh economic releases, overall sentiment in the market appears to be influenced by rising expectations of the Fed raising interest rates during the course of 2015. Meanwhile, the Federal Reserve’s labour market conditions index fell for February, which was in contrast to the last week’s release showing robust job additions in the nation. Later in the day, Dallas Fed President, Richard Fisher, in his final speech as a US central bank official stated that the Fed should soon raise interest rates, citing the robust improvement in the job market.
The greenback is trading higher against its major counterparts this morning. Meanwhile, investors will keep a tab on the NFIB small business optimism survey and the JOLTS job openings report, due today. Traders will particularly eye the JOLTS report today, as an increase in the job openings would point to a firmer labour market in the US and would provide yet another indication of the underlying strength of the US economy.
Euro – European Markets
The Euro continued to lose ground against the US Dollar yesterday, as the ECB began its highly-anticipated €60 billion a month bond buying programme. However, the central bank began its asset purchase programme on a smaller scale, as reports indicated that the ECB purchased bonds of at least five countries, but the volume of individual trades ranged from €15 million to €50 million. Meanwhile, in yesterday’s Eurogroup meeting it was decided that technical talks between Greece and its creditors will commence from Wednesday. On the macro front, German’s trade surplus narrowed more than market expectations for February, led by a decline in exports. However, a weaker Euro could possibly turn tables and lead to improved export growth going forward.
The single currency is trading lower against its key peers this morning and nudged below the 1.08 mark against the US Dollar. The just released macro data from the Euro zone showed that industrial production output in France surprisingly rose while that in Italy unexpectedly fell, on a monthly basis.
Other Currencies – Highlights
The New Zealand Dollar nudged lower against the greenback yesterday, after the New Zealand Prime Minister, John Key, in a post-cabinet press conference stated that inflation in the nation is too low and that he expects the annual rate of inflation to fall further than the 0.8% reported in the previous year. The pair will now take further direction from this week’s Reserve Bank of New Zealand’s interest rate decision and its monetary policy statement. Market participants expect no change in the official cash rate and anticipate downward revision to the inflation outlook due to falling oil prices. However, the Prime Minister’s statement has added uncertainty about the action the central bank will take in its upcoming meeting.
Macro data released yesterday showed spending on debit and credit cards were higher for February, led by spending gains in hotel and apparel. Falling oil prices, low mortgage rates and rise in house prices seems to have boosted consumer confidence and spending in the new year. Meanwhile, investors will eye the REINZ house price index for February, scheduled for release in New Zealand later today.