Sterling Under Pressure
An improvement in today’s UK construction output data for September has shown that the pace of activity in the nation’s construction sector has not lost momentum in the latter half of 2014. However, with broader macro indicators pointing towards the prospect of a delay in the timing of an interest rate rise in the UK, the Pound has continued to remain under pressure against the majors this morning.
In the Euro zone, investors will eye the region’s preliminary GDP reading for the third quarter after data released earlier today showed that Europe’s two largest economies avoided a recession. Across the Atlantic, traders will eye today’s retail sales and Reuters/Michigan consumer confidence reports for further direction to risk appetite.
Pound Sterling – UK Markets
The just out report has shown that the pace of construction output in the UK improved for September, albeit less than expected. Considering that the construction sector has been a notable performer for the first half of 2014, today’s report has boosted prospects that the construction sector might keep Britain’s economic growth supported for the third quarter. However, the Pound has shown little reaction to today’s data and is trading below the 1.57 level against the greenback. Weak investor sentiment caused Sterling to register sharp losses against the majors this week, especially after the BoE quarterly inflation report poured cold water on hopes of an early interest rate rise in the UK.
Moving forward, consumer price inflation and retail sales data in the UK scheduled next week will attract significant attention, especially after the BoE downgraded its inflation forecast for the first quarter of 2015. Additionally, traders will keep a tab on the minutes of the BoE’s latest policy meeting to gauge the amount of slack in the job market, after this week’s UK labour market report showed weaker than expected employment growth for the third quarter.
US Dollar – US Markets
The greenback is trading broadly on a firmer footing against most of its key peers this morning ahead of today’s crucial retail sales report in the US. The report is anticipated to show a rebound in the nation’s retail sales for October after an unexpected drop in volumes for the end of the third quarter. Additionally, market participants will keep a tab on the preliminary Reuters/Michigan survey which is expected to show that consumer morale in the US improved for November. A lack of downside surprise in today’s economic releases could possibly confirm that US consumer spending is likely to remain robust during the fourth quarter.
The US Dollar traded in a tight range against the common currency in yesterday’s trading session. The jobless claims report in the US showed a rise in the number of first time jobless claimants for the previous week, but the number remained close to its pre-recession lows. Meanwhile, for the week ahead, market participants will closely scrutinise the FOMC minutes for further clarity about the future course of monetary policy in the US.
Euro – European Markets
The preliminary GDP readings released earlier today showed that economic growth across key European nations rebounded for the third quarter. With Germany and France dodging a recession, the single currency gained some momentum against the US Dollar during the course of today’s trading session. However, given that most of the latest macro triggers in the Euro bloc have been pointing towards a slowdown, the prospects of a downward revision to these GDP readings cannot be ruled out. Additionally, market participants will keep a tab on today’s flash GDP data in the Euro zone, which is anticipated to show that the region’s economy expanded marginally for the third quarter after reporting a flat growth during the previous quarter.
The Euro is trading on a firmer footing against the greenback today, in response to today’s upbeat macro data. Furthermore, US retail sales and Reuters/Michigan consumer sentiment survey will attract attention for further cues to the Euro-US Dollar pair. Looking ahead, next week’s crucial ZEW surveys and manufacturing and services PMI reports in Europe will keep investors in the common currency interested.
Other Currencies – Highlights
The Canadian Dollar lost ground against the greenback in yesterday’s trading session following the release of a downbeat housing market report in Canada. Data showed that monthly growth in the nation’s new house prices was slower than expected for September. The report further revealed that growth in house prices across various metropolitan areas in Canada was unbalanced. Additionally, considering that crude prices have fallen to multi-year lows recently, the Canadian Dollar continued to remain under pressure against its major peers.
With no crucial macro data in Canada due later today, market participants will keep a tab on US retail sales and Reuters/Michigan consumer sentiment data for further direction to the Canadian Dollar against the US Dollar. Going forward, next week’s Canadian consumer price inflation reading for October will be keenly eyed for signs of any slowdown amid subdued global macro conditions.