UK Construction Activity Steady in March
In today’s economic news, the just released UK construction PMI report showed that construction activity remained steady in March. The report came in after Friday’s data showed that UK manufacturing activity was slightly lower than anticipated for March in the wake of Brexit concerns. In the Euro zone, the investor sentiment index reported by the Sentix improved for the first time this year. The Euro area’s producer prices data, due later today, is anticipated to show continued price pressures due to weaker commodity prices. Also on tab will be the Euro zone’s unemployment rate which is expected to remain unchanged.
Across the Atlantic, investors will eye the final print of the durable goods orders along with February’s factory orders scheduled for release later in the day. A separate indicator of the overall labour market in the US will also attract market attention.
Pound Sterling – UK Markets
The Pound is trading lower against the greenback this morning after the just out data showed that the pace of growth in construction activity in the UK remained unchanged at a 10-month low in March, painting a gloomy picture of the construction sector in the first quarter of 2016. The survey indicated that a pickup in commercial and civil engineering activity last month was eclipsed by the residential housing sector, which registered the weakest pace of growth since January 2013 despite numerous efforts taken by the Government to boost more housebuilding.
The local currency has failed to add significant gains in recent times as concerns over Britain’s referendum on its exit from the European Union continued to weigh on Sterling. With no major economic releases scheduled later today, data from the dominant UK services sector will be eyed tomorrow in hopes of positive news for the private sector economy. Also on tab will be the BRC retail sales data for further direction in trading in the Pound against its major currency peers.
US Dollar – US Markets
On Friday, the US Dollar trimmed most of its losses against its key currency counterparts after the US jobs data for March surprised investors to the upside. Data revealed that nonfarm payrolls in the US rose more than expected last month, mainly driven by creation of new employment opportunities in the construction, retail and health care sectors. Further good news came in the form of average hourly earnings, which rebounded above expectations. This data has raised hopes that the US Federal Reserve might increase interest rates gradually this year. Meanwhile, the unemployment rate climbed from an eight-year low of 4.9% to 5.0% in March, partly attributed to an increase in the number of people entering the labour market, hinting at a growing confidence in the nation’s jobs market. Separate data showed that the US ISM manufacturing PMI advanced at a better than expected pace and returned to expansionary territory in March.
Moving ahead, investor focus will be on factory orders and the final print of the durable goods orders, due later today.
Euro – European Markets
The common currency is trading on a weaker footing against its key currency counterparts this morning. However, the shared currency continued to trade close to its five-month high level against the US Dollar. The just released numbers showed that sentiment in the Euro area region, reported by Sentix, has improved for April for the first time this year. However, the figures which came in below expectations failed to accommodate the additional stimulus measures from the European Central Bank.
In a short while, the Euro zone’s labour report will be published, with expectations that the unemployment rate will remain unchanged for February. The unemployment rate had slipped lower for the previous five consecutive months, showing signs of improvement in the region’s labour market. Also on tab will be the Euro zone’s producer price index scheduled later today. Producer prices have been declining for the past eight consecutive months and expectations are rife that they will continue to decline in February albeit at a slower pace than the previous month.
Other Currencies – Highlights
The Australian Dollar is trading on a weaker footing against the US Dollar this morning following the publication of dismal retail sales figures in Australia. The Australian Bureau of Statistics reported that retail sales were flat in February, defying expectations for a slightly faster pace of growth witnessed in the previous month. Separately, data showed that the nation’s house building permits rebounded more than anticipated in February. However, the boom in the housing sector, which is considered to be a key contributor to the nation’s economy, is anticipated to reach its peak and further cause headwind in the second half of 2016.
Going forward, market participants will closely monitor the Reserve Bank of Australia’s interest rate statement which is scheduled for tomorrow. The central bank is anticipated to hold its interest rates unchanged at the record low level of 2%. The recent signs of improvement in the nation’s economic health, which is supported by steady employment growth and an appreciation of the Aussie Dollar, will weigh on the central bank’s interest rate decision. The central bank will also take a cue from the housing data releases in Australia.