UK Industrial Production Drops
Today’s industrial production data showed that activity in the UK for December dropped more than anticipated, compared with an unchanged reading in the previous month. Going forward, traders will remain focused on the NIESR’s GDP forecast scheduled later today to gauge the health of Britain’s economy for the three months ended January.
Across the Atlantic, today’s NFIB survey is expected to show an improvement in small firms’ morale and affirm prospects of robust growth in the US economy. In the Euro zone, with no crucial macro updates, traders are likely to remain focused on tomorrow’s Finance Ministers’ meeting in the region, especially amid fears of Greece’s exit from the common currency bloc.
Pound Sterling – UK Markets
The just out report has revealed that industrial production in the UK dropped more than market anticipations for December. Following this release, the Pound came under pressure against the US Dollar. With the fourth quarter’s preliminary GDP reading in the nation showing a slower than expected expansion, today’s data has weakened the case of an upward change in the nation’s revised GDP readings for the quarter. Moving ahead, market participants will keep a tab on today’s NIESR estimate of the UK GDP for the three months ended January to verify if economic recovery sustains through 2015, especially considering that inflation in the nation remains muted. Amid prospects of a deflationary threat hovering in the UK, traders will scrutinise the BoE’s quarterly inflation print scheduled later this week to gain an insight into the central bank’s policy plans going forward.
Yesterday, the Pound gained ground against the Euro in the early half of the trading session amid concerns over a Greek exit from the Euro zone. However, Sterling reversed those gains as investors remained focused on crucial updates from the BoE scheduled later this week.
US Dollar – US Markets
Following the release of today’s downbeat consumer price inflation data in China, the US Dollar is likely to remain supported against its high yield counterparts. Meanwhile, the greenback is trading in a tight range against the Japanese Yen this morning ahead of the NFIB small business optimism survey scheduled in the US today. This survey is anticipated to show that morale among small domestic firms improved for January and reached close to its pre-recession peaks. However, a downside surprise in today’s NFIB print might raise concerns over the resilience of robust labour market growth in the US, especially considering that small businesses have been a key driver of employment trends in the nation of late. Going forward, market participants will eye this week’s US retail sales report which is expected to show a fall in domestic sales for January, particularly after deflationary headwinds in the economy kept overall spending levels in the nation under check.
In yesterday's trading session, the US Dollar remained buoyed against the common currency as concerns about a Greek exit from the Euro zone weighed on the single currency against the majors.
Euro – European Markets
Yesterday, the Euro remained range bound against its key peers despite the release of encouraging data in the Euro zone. A report revealed that German trade surplus widened unexpectedly for December, amid a sharp rebound in exports. In light of recent encouraging macro updates in Germany, yesterday’s upbeat trade data points to an improvement in Europe’s largest economy. Additionally, the Sentix survey showed a more than anticipated improvement in morale among domestic investors, as they look forward to the ECB’s quantitative easing programme in the Euro zone. However, concerns over a standoff between the newly elected Greek government and its international creditors kept the single currency under pressure. Additionally, recent public announcements made by Greek Ministers’ expressing their support for rolling back the nation’s austerity measures strengthened the case of Greece’s exit from the Euro zone.
The Euro is trading in a tight range against its major peers this morning. Data released earlier today revealed that France’s industrial production rose above expectations for December, amid falling fuel prices.
Other Currencies – Highlights
The Australian Dollar is trading on a weaker footing against the greenback this morning. Data released earlier today revealed that house prices in Australia rose more than market expectations for the fourth quarter. Considering that the Reserve Bank of Australia cut its interest rate recently, prospects of a downside in the Australian house price growth remain limited going forward. Separately, the National Australia Bank’s monthly business survey showed that confidence in business conditions in the nation improved for January, particularly with low oil prices benefiting the transport and utilities sector in the country. Moving ahead, market participants will keep a tab on the Westpac Consumer Confidence report scheduled later today to ascertain if morale among Australian consumers remains supported, especially after the RBA loosened its policy stance recently.
Later this week, investors in the Aussie Dollar are likely to remain focused on the Australian labour market report for January. Additionally, US retail sales and preliminary Reuters/Michigan consumer morale data will be eyed later this week for further direction.