UK Manufacturing Output Falls More Than Forecast
In the UK, the just published figures indicate that manufacturing production dropped more than forecast in February, after having bounced back for the first time in the last three months in January. In separate data, the UK’s trade deficit narrowed while visible trade deficit widened in February. Later in the day, the National Institute of Economic and Social Research will release GDP estimates for the UK which will attract significant market attention. In Europe, German trade surplus widened more than anticipated for February, following a pick-up in the nation’s exports. Meanwhile, another economic release in the Euro zone showed that industrial output dropped more than expected in January in the second largest economy of the Euro region.
Later in the day, investors will eye a speech by the New York Federal Reserve (Fed) President, William Dudley, for further insights into the central bank’s stance on the expected interest rate path.
Pound Sterling – UK Markets
The Pound is trading higher against most of its major currency counterparts this morning. The just out data showed that Britain’s manufacturing production fell more than expected in February, hinting that the sector might weigh on the nation’s economic growth in the first quarter. This data followed last week’s UK manufacturing PMI which indicated that the nation’s manufacturing activity slightly improved in March following February’s 34-month low reading. Meanwhile, the Brexit referendum along with the persistent volatility in global financial markets is anticipated to depress activity in the near term. Separate data showed that the UK’s visible trade shortfall widened more than anticipated for February, following a sharp revision to the January figures. This deficit is partly attributed to the record amount of imports from the European Union in February.
Later today, investors will eye the UK GDP estimates from the National Institute of Economic and Social Research, for the three months ended March.
US Dollar – US Markets
The US Dollar rebounded against the shared currency and the Pound yesterday, after the Fed Chairwoman, Janet Yellen, expressed confidence in the US economy. She stated that the US labour market has strengthened and the nation’s inflation has modestly improved despite persistent pressure from a stronger local currency and lower oil prices. She also defended the US policymakers’ decision of raising interest rates in the US Fed’s December policy meeting last year and restated that the central bank is in line with its interest rate outlook for the year. On the macroeconomic data front, the number of persons applying for first-time unemployment benefits in the US fell more than expected last week, hinting that the US labour market continued to strengthen despite a string of economic releases suggesting a slowdown in the nation’s economic growth.
Going forward, investors will await today’s speech by the New York Fed President, William Dudley, to seek additional insights into the nation’s economic growth prospects and for signs on further interest rate increases by the Fed later this year.
Euro – European Markets
The shared currency extended its losses against the Pound this morning as traders continued to focus on the latest dovish comments made by the European Central Bank (ECB) President, Mario Draghi. Yesterday, the ECB President stated that the Euro zone is prone to challenges from the global economy and is unclear over the region’s ability to cope with it. Additionally, the ECB minutes indicated that the governing council discussed a steeper rate cut, but eventually decided that a smaller one was appropriate, given the current economic assessment. The minutes also revealed that the central bank did not rule out the possibility for further rate cuts, if the inflation outlook deteriorates.
On the macro front, trade data released earlier today showed that German trade surplus widened more than expected in February. German exports bounced back in February to rise more than market estimates, signalling that the non-domestic demand for goods picked up pace amid waning global demand. The January reading of the nation’s trade surplus was revised slightly lower from the reported reading in the previous month.
Other Currencies – Highlights
The Swiss Franc is little changed against the US Dollar this morning, following the release of consumer inflation numbers for March. Data showed that consumer prices in Switzerland rose in line with market estimates in the last month. Prices of consumer goods picked up for a straight second month as oil prices showed signs of recovery. Earlier in the day, separate data revealed that Switzerland’s jobless rate rose in line with market expectations in March on a seasonally adjusted basis. Whereas, on a non-seasonally adjusted basis, the nation’s unemployment rate edged lower in line with estimates last month.
Later in the week ahead, the direction in the US Dollar - Swiss Franc currency pair will be dependent on a string of economic releases in the US. Meanwhile, in Switzerland, the only economic release to be monitored will be producer and import prices, which act as a key guidance to the nation’s consumer price index.