With a light economic calendar in the UK today, the disappointing RICS house price report failed to trigger any reaction among Sterling investors. This report offered further evidence of slowing house price growth in the UK, especially after the BoE tightened its mortgage lending norms earlier this year. Going forward, investors’ focus is anticipated to remain on the ECB’s TLTRO auction scheduled later today. A weak response is likely to strengthen prospects of an outright bond purchase programme in the Euro zone.

Across the Atlantic, the retail sales report for November will be eyed to help investors gauge the health of spending in the US for the last quarter of 2014, particularly amid prospects that strong consumer expenditure might cause an upward revision in the nation’s final GDP print for the third quarter.

Pound Sterling – UK Markets

In yesterday’s trading session, Sterling capitalised on the greenback’s weakness which lifted the Pound-US Dollar pair above the 1.57 mark. Data released yesterday showed that the total trade deficit in the UK narrowed more than expected for October, amid a slight improvement in exports and a fall in imports due to weak crude oil prices.

The RICS report for November released earlier today showed that house price growth slowed for a sixth consecutive month. With the overheating UK housing market seemingly in control due to the tighter mortgage lending measures introduced by the BoE earlier this year, house prices in the UK are anticipated to remain pressured. With no other updates on the domestic macroeconomic front, the Pound is trading in a tight range, albeit on a weaker footing against the common currency ahead of the crucial TLTRO auction scheduled in the Euro zone. Going forward, US retail sales data due later today is likely to keep investors in the Pound-US Dollar pair interested.

US Dollar – US Markets

The US Dollar is trading mixed against its key peers this morning ahead of today’s US retail sales report for November, which is likely to provide an insight into the health of consumer spending. With yesterday’s quarterly services survey of the Commerce Department suggesting that the US GDP reading might be upwardly revised due to robust consumer spending levels for the third quarter, today’s retail trade numbers will garner additional attention among investors. Despite dismal Black Friday sales last month, prospects of an upside surprise in these numbers cannot be ruled out amid the recent drop in energy prices, which might have boosted domestic spending. Separately, traders will eye the initial jobless claims survey for the previous week, especially after recent surveys have shown a negative divergence from market expectations.

In the absence of crucial macro releases yesterday, the greenback lost ground against its major counterparts. The US Treasury’s monthly budget statement released yesterday showed that deficit for November narrowed more than anticipated.

Euro – European Markets

Consumer prices remained flat on a monthly basis in Germany for November while they fell in France, strengthening fears of deflation in the Euro zone. Additionally, the ECB in its monthly report indicated that it would be particularly vigilant on oil price developments since lower prices would push inflation down. Market participants now remain focused on the central bank’s crucial TLTRO auction scheduled later today. With the first tranche of the TLTRO auction failing to expand the ECB’s balance sheet as per market expectations, a weak response to today’s auction is likely to strengthen prospects of further stimulus measures in the region. Amid recent comments by various ECB officials, including Peter Praet who indicated that the Euro zone’s inflation might fall into negative territory going forward, investors will keenly eye today’s auction result.

In yesterday’s trading session, the common currency gained ground against the greenback and the Pound and crossed the 1.24 mark and 0.79 level, respectively.

Other Currencies – Highlights

The Kiwi Dollar gained ground against the greenback and rose above the 0.78 mark in yesterday’s trading session. The RBNZ in its policy meeting kept its key interest rate unchanged at 3.5%. However, the RBNZ Governor, Graeme Wheeler, indicated that due to the recent softness in inflation across most of the developed economies and amid weak global commodity prices, the central bank is expected to maintain its current policy stance for some time. However, he expressed confidence towards the New Zealand’s economy going forward and indicated that the recent fall in oil prices is likely to prove beneficial for the nation.

With no other domestic economic releases, the Kiwi Dollar is trading in a tight range against the greenback this morning. With US retail sales data and Euro zone’s TLTRO auction scheduled later today, the Kiwi is likely to witness some volatility in the latter half of the trading session.