UK Consumer Confidence Holds Steady
Today’s data revealed that confidence among consumers in Britain held steady for February, but was slightly shy of market expectations. With no other notable macro triggers in the UK today, investors will keep a tab on next week’s manufacturing and services PMI readings and the BoE’s policy meeting for further direction.
Across the Atlantic, the GDP report is anticipated to show that the nation’s economic growth was revised down for the last quarter of 2014, as an elevated US Dollar weighed on external trading activities. In the Euro zone, today’s flash German consumer price inflation data will be eyed to gauge if deflationary headwinds in the economy show any signs of easing.
Pound Sterling – UK Markets
The GfK report released earlier today revealed that morale among UK consumers remained surprisingly unchanged for February, despite the robust pace of growth in domestic earnings and cheaper fuel costs. Investors have shown little reaction to today’s data and the Pound has continued to trade in a tight range against the US Dollar this morning. Later today, traders in the Sterling-US Dollar pair will eye the revised US GDP data for further direction. Moving forward, manufacturing and services PMI readings in the UK, along with the BoE’s policy meeting scheduled next week, is likely to keep investors interested.
The Pound lost ground against the greenback yesterday and fell below the 1.55 mark, amid a broad strength in the US Dollar. The Office for National Statistics, in its revised GDP print yesterday, reaffirmed that Britain’s economy expanded in line with the earlier estimate for the fourth quarter of 2014. The report further revealed that spending among households and investment by firms in Britain rose at a slower pace for the quarter, as low oil prices weighed on domestic expenditure as wells as on investment in the petroleum sector.
US Dollar – US Markets
The US Dollar firmed against the single currency, following a string of US macro releases in yesterday’s trading session. Inflation data released yesterday showed that core consumer prices rose more than market expectations for January. With core CPI climbing at a steady pace, weaker headline CPI data appears to be an outcome of transitory impact of lower oil prices, as indicated by the Fed Chief in her recent testimony. With influential policymakers maintaining that future course of monetary policy will be data dependent, the FOMC will be encouraged by the US durable goods report which rebounded for January. However, the number of initial unemployment claims climbed more than expected for last week.
The greenback is trading in a tight range against its peers this morning. Market participants will keenly eye the second estimate of GDP data in the US for the fourth quarter of last year, set for release later today. The GDP reading in the US is expected to show a decline from the preliminary estimate as subsequent data releases including the trade balance and inventories have pointed to a weaker pace of activity in the US.
Euro – European Markets
The Euro is trading higher against the Pound this morning, ahead of the flash consumer price inflation readings from the Euro bloc’s member nations, including Germany and Italy, scheduled later today. Meanwhile, markets expect deflationary fears to ease in Germany and consumer prices in the nation to rise for February from the previous month. Going forward, traders will eye the flash consumer price reading for the broader Euro zone region early next week after regional releases today.
The Euro traded lower against the majors yesterday, despite positive macro releases from the region. The German labour market report revealed that the jobless rate for February held steady from the previous month, while the number of jobless people dropped sharply, twice as much as in January. Meanwhile, economic releases from the Euro area were mixed yesterday, with only economic sentiment surpassing market expectations. Consumer confidence for February was in-line with estimates, while business climate, services sentiment and industrial confidence for the same month missed market estimates.
Other Currencies – Highlights
The Japanese Yen is trading in a tight range against the US Dollar this morning following a raft of data releases in the Asian session. Data was mixed and provided no clear direction where the nation’s economy is headed. The most impressive was the preliminary industrial production data which showed that industrial output grew at the fastest pace for January. Supporting this was the significant rise from the previous year in the number of construction orders for January. On the other hand, the jobless rate climbed to a four month high while the drop in household spending and retail sales was larger than expected, all for the month of January. Additionally, core consumer prices rose less than anticipated for January, a setback to the BoJ’s efforts to boost inflation. It will be interesting to see how inflation measures behave after April, when the impact of last year’s sales tax rise starts to ease. Meanwhile, the BoJ Governor Haruhiko Kuroda reiterated the central bank’s commitment to its inflation target and end deflation in the country.
The Japanese Yen traded lower against the greenback yesterday, amid a broad strength in the US Dollar.