The just released economic data indicated that Britain’s construction PMI declined more than market expectations for April. Moving ahead, the buildup to UK’s general elections is expected to have an influence on the Pound in the upcoming trading sessions. Also, tomorrow’s services PMI and trade data due later this week will attract market attention.

Across the Atlantic, market participants will keep a tab on the nation’s trade data and ISM non-manufacturing PMI reading to gauge the health of the economy. In the Euro zone, Spanish unemployment figures dropped to its record low for April, possibly suggesting that the nation is in the middle of a strong recovery.

Pound Sterling – UK Markets

The Pound has pared some of its initial session gains against the majors this morning after the just released data showed that construction activity in the UK eased more than market expectations for April. Going forward, the uncertainty hovering around Thursday’s general elections is expected to keep Sterling under pressure against its major counterparts. On the macro front, Markit services PMI due tomorrow is anticipated to attract market attention. Traders will also keep a tab on trade balance data scheduled later this week for further direction.

Data released during the end of last week showed that growth in the UK’s manufacturing sector slowed sharply for April. The Markit manufacturing index dropped unexpectedly from the previous month, as strength in the local currency seems to have dampened demand for UK goods globally. In addition, Britain’s mortgage approvals data for March surprised on the downside, signalling that home buyers in the UK are wary ahead of the upcoming elections, with polls showing no clear majority. Separately, consumer credit data showed an increase in demand for loans among British households and businesses for March.

US Dollar – US Markets

The US Dollar has edged higher against the Euro this morning, ahead of key economic releases including trade data and the ISM non-manufacturing PMI scheduled later today. After a significant narrowing in trade deficit for February, market participants expect trade deficit to widen sharply for March, as an appreciating US Dollar might have impacted the competitiveness of its export goods. Also, the West Coast port strikes earlier this year might have some impact on the trade data for March. Separately, the ISM non-manufacturing PMI for April is likely to have dipped slightly from the previous month. But, recent readings indicate continued expansion in service sector activity in the nation. Going forward, market focus will shift towards Friday’s non-farm payrolls report for April to gauge the health of the US labour market, especially after a marked slowdown in job additions witnessed in March.

The US Dollar traded higher against its key peers yesterday after factory orders in the US posted its largest gain in eight months for March, supported by demand for aircrafts.

Euro – European Markets

The Euro lost ground against the greenback this morning. Meanwhile, data released earlier today indicated that Spain’s economy is showing signs of recovery after the number of unemployed people reduced substantially for April. Additionally, the European Commission’s economic forecast report due later today will attract market attention for further cues on the health of the region’s economy. The European Commission’s outlook for inflation will be watched closely, given the recent spurt in energy prices.

The Euro nudged lower against the US Dollar yesterday after the final print of the Euro zone’s manufacturing activity for April showed that expansion in the sector slowed modestly from the previous month. In a noteworthy development, the head of the IMF’s European department, Poul Thomsen, cautioned that the agency might hold back the payment of an aid tranche to Greece, if the Euro zone creditors and Greece fail to reach an agreement. In the absence of any major economic data from the Euro zone today, market participants are likely to keep a close watch on developments related to Greece for further direction.

Other Currencies – Highlights

The Australian Dollar rallied above the 0.79 mark against the US Dollar despite the Reserve Bank of Australia reducing its official interest rate by 0.25% to a record low of 2%. Market participants believe that the removal of an explicit easing bias and any forward guidance on interest rates from the central bank hinted that the RBA’s easing cycle might be over for now, thereby leading the Australian Dollar to move higher against its major counterparts. However, the central bank repeated the need for a lower Australian Dollar due to a significant decline in key commodity prices. Separately, data showed that Australia’s trade deficit narrowed less than expected for March.

Going forward, market participants will keep a tab on Australia’s new home sales and retail sales data scheduled tomorrow for further direction.