UK House Price Growth Slows
Data released earlier today revealed that house prices for December in the UK rose at the slowest annual rate in thirteen months. This assumes significance given the BoE’s tougher lending measures earlier this year. However, today’s report indicated that housing activity in the UK is expected to improve in the months ahead, amid signs of a pickup in domestic spending levels. The Pound has shown little reaction to today’s data as sentiment among investors remained subdued amid prospects of a snap election in Greece early next year.
Across the Atlantic, the Conference Board’s report scheduled later today is anticipated to show that morale among consumers in the US improved and reached close to its pre-recession peak.
Pound Sterling – UK Markets
The Nationwide report released earlier today revealed that house price growth in the UK slowed for December as tighter lending measures introduced by the BoE earlier this year continued to weigh on the nation’s home loan growth. Considering that house price growth continued to ease for a fourth straight month, market participants have gained confidence that overheating in Britain’s housing market is seemingly in control now. However, the report revealed that activity in Britain’s housing market is likely to pick up going forward. The Pound has shown little reaction to today’s data and has continued to trade in a tight range against the majors. Going forward, Sterling investors will keep a tab on the Markit manufacturing PMI report later this week to gauge the health of manufacturing activity in the UK for December. Additionally, traders will eye the mortgage approvals data for November later this week to assess current demand trends in the housing market.
The Pound lost ground against the greenback in yesterday’s trading session after prospects of snap elections in Greece caused investors to take cover in safe haven assets.
US Dollar – US Markets
The US Dollar is trading in a tight range against its key counterparts ahead of the Conference Board’s consumer confidence survey in the US later today. This survey is expected to show a sharp improvement in morale among consumers in the US and stoke hopes that local spending remained well supported for the last quarter of 2014. Possibility of an upside surprise in today’s survey cannot be ruled out, especially considering the recent plunge in energy prices which has left consumers with a higher disposable income.
Yesterday, the greenback gained ground against the majors. A report released by Dallas Fed yesterday revealed that the pace of manufacturing activity in the region slowed more than expected for December. Considering that the region is a key oil producer in the US, the recent drop in global oil prices is a likely key factor to have weighed on the region’s downbeat manufacturing performance. Going forward, market participants will keep a tab on the ISM’s manufacturing PMI reading later this week in the US to gauge if domestic activity has remained resilient to the subdued global conditions prevalent in December.
Euro – European Markets
The Euro failed to hold the 1.22 mark against the greenback yesterday after the final round of voting in the Greek Parliament failed to elect a President. With Greece heading into a snap election early next year and preliminary surveys indicating that the opposition might come to power, prospects of an exit of Greece from the European Union cannot be ruled out, especially considering the opposition’s plans to implement anti-austerity measures in the nation. Separately, an ECB spokesperson stated that the central bank will review Greece’s bailout programme next year after the formation of the new government. This was another blowback to investor sentiment, particularly amid recent optimism surrounding the possibility of a sovereign bond purchase programme in the Euro bloc.
Data released earlier today showed that confidence across Italy’s business segments improved for December, despite yesterday’s consumer morale reading easing for the third consecutive month. Additionally, another report revealed that M3 money supply in the Euro zone rose at a stronger pace for December.
Other Currencies – Highlights
The Swiss Franc traded on a weaker footing against the greenback and the US Dollar-Swiss Franc pair rose above the 0.99 mark. The UBS survey released yesterday revealed that domestic consumption weakened for November as registrations for new cars declined sharply last month. Considering that private consumption plays a crucial role in Switzerland’s GDP, weak domestic demand is likely to boost prospects of a slowdown in the nation’s economic growth. Additionally, with deflationary concerns hovering over the Euro zone, market participants remain concerned that headwinds from Europe might continue to weigh on Switzerland’s macro health going forward. Meanwhile, the report further indicated optimism among retailers improved last month as Christmas shopping is likely to keep domestic sales buoyed.
The Swiss Franc is trading on a firmer footing against the greenback. With no important economic updates in Switzerland today, traders will eye consumer confidence report in the US today for further direction.