UK Construction PMI at a 10-Month Low in February
In today’s economic news, the just released UK construction PMI report showed that the sector expanded at a slower than estimated pace in February. The report came a day after the UK manufacturing PMI had slipped back to its lowest levels in 34 months for February. In a short while, the Bank of England (BoE) policymaker, Ben Broadbent’s speech in London will be eyed for cues regarding the central bank’s interest rate outlook.
In the European data space, the region’s producer prices data is due for release today and is anticipated to show continued price pressures in the 19-nation currency union. Across the Atlantic, the ADP employment report will attract significant market interest ahead of the notable non-farm payrolls report in the final session of this week.
Pound Sterling – UK Markets
Earlier today, the Pound surrendered its gains against the US Dollar. The just out Britain’s construction PMI report indicated that construction activity growth in the sector unexpectedly declined to its lowest level in ten months for February. The construction industry in the UK has been a bright spot for the nation’s economy since August 2013. However, a slowdown in the nation’s house building activity weighed on the UK’s construction industry activity last month. Today’s data follows the disappointing UK manufacturing PMI released yesterday which had showed that factory activity growth was the weakest in almost three years for February. The survey has also added to signs of a slowdown in the UK economy in the first quarter. Meanwhile, the British Retail Consortium earlier reported that overall shop prices tumbled in February, the thirty fourth consecutive month of deflation, as retailers offered more discounts to attract shoppers.
Later in the day, speeches by two of the UK central bank monetary policy setters will be eyed by investors for further insights about the BoE’s interest rate outlook.
US Dollar – US Markets
The US Dollar traded higher against most of its key currency counterparts yesterday, amid improved optimism surrounding the health of the US economy following the release of upbeat manufacturing data in the US. A report by the ISM revealed that the US manufacturing sector strongly bounced back in February, as moderation in the strength of the US Dollar since the start of this year helped the industry.
Looking ahead, today’s ADP employment data which is a precursor to Friday’s non-farm payrolls report will be eyed to gauge the US macro trend in February. Although unemployment growth has recently slowed, the US labour market remains strong enough to aid solid recovery in the nation. Today’s ADP data is expected to show that the number of employed people in the US has slightly declined in February. The current growth trend is unlikely to fuel any concerns about the health of the US labour market at this stage. Separately, weekly numbers for new mortgage applications is also on tab for release later today.
Euro – European Markets
Yesterday, the Euro nudged lower against the Pound as economic data from across the Euro zone bolstered the case for more European Central Bank (ECB) action in the coming week. A survey showed that Euro zone manufacturing activity expanded at its weakest pace in a year last month, triggering fears that the region will face yet another year of sluggish growth in 2016. Data came out one day after official figures had indicated that the Euro zone slipped back into deflationary territory in February, thus intensifying the pressure on the ECB to add stronger easing measures at a highly anticipated policy meeting next week.
The shared currency is trading in a tight range against the greenback this morning, amid little economic updates scheduled in the Euro area today. Amongst which, investor focus will be on the Euro zone’s producer prices index for January which is anticipated to show continued weakness. Earlier today, data revealed that the number of unemployed people in Spain rose more than expected in February but the pace of increase was slower than the previous month.
Other Currencies – Highlights
The US Dollar - Swiss Franc currency pair pared gains after the release of Switzerland’s growth data earlier today. The Swiss economy grew at its fastest pace in the whole of 2015 for the last three months of the previous year. Switzerland’s fourth quarter growth data was better than expected despite a steep rise in the Swiss Franc last year when the central bank had removed its cap on the currency in January. The Swiss economy managed to return to growth at the end of last year as it tussled off the impact of a currency shock on its exports and manufacturing industry. Consumption expenditure from private households and the public sector contributed to growth in the Swiss economy.
In the absence of further economic data in Switzerland, investors will keep a tab on a pair of US economic releases today for further direction. In addition, traders will likely trade cautiously ahead of a possible Swiss central bank action in the wake of the upcoming ECB meeting next week.