UK Mortgage Approvals Increase
Appetite for mortgages in the UK continues to rise, with data today showing that mortgage approvals climbed for the third straight month and is now perched at a six month high.
In Europe, confidence surveys are expected to show a notable pick up in private sector morale with the advent of ECB’s accommodative measures. Later today, the German CPI figures will be watched to ascertain the influence of volatile energy prices on overall inflation for the current month. The focus now shifts to the upcoming labour market reports from the US. However, a clearer picture will only unravel early next week, as the nonfarm payrolls report is due to be released on Good Friday.
Pound Sterling – UK Markets
The Pound moved higher against the greenback on Friday, supported by comments from the BoE Governor, Mark Carney, that the central bank might resort to an interest rate rise in future despite low inflation. Additionally his colleague, Ben Broadbent, downplayed deflation concerns by opining that the recent easing trend was largely due to a drop in oil prices and he expects inflation to rise "quite steeply" in early 2016. Further, a lower than expected final GDP reading in the US supported the Pound-US Dollar pair.
In today’s trading session, Sterling is looking for direction against the majors. Data just released indicated that mortgage approvals in the UK rose for February. However, most market attention is focused on the final fourth quarter GDP reading in the UK scheduled tomorrow, which is expected to remain unrevised. Additionally, manufacturing and construction PMIs for March, due later this week, will hog the limelight. The readings should provide a performance indication of sectors during the first quarter and could result in volatility in the Pound against the majors.
US Dollar – US Markets
The US Dollar lost ground against the Euro on Friday, following the US Fed Chairperson’s cautious sounding comments on interest rates. Janet Yellen, in a speech on Friday, while maintaining her stance that an increase in rates may be warranted later this year, added that the Fed would take a gradual approach to increasing interest rates. The US Dollar remained subdued after data showed that the US economy expanded below market expectations and growth remained unchanged from the preliminary estimate for the fourth quarter of last year. Another report showed that March’s final reading on the Reuters/Michigan Consumer Sentiment Index ticked down from the previous month, as a slight rebound in gasoline prices and bad weather weighed on lower-income households.
The US Dollar is trading higher against the major currencies this morning, ahead of today’s data on personal income and spending for February, which might give further cues on the strength of the US economy. US pending home sales for February will also be eyed for further direction.
Euro – European Markets
The Euro is trading on a weaker footing against the US Dollar this morning, as Greece’s international creditors mull over new reform plans. On Friday, the Greek government submitted a new proposal of its reform plans that might yield more than around €3 billion this year, in an attempt to secure further bailout funds for the cash-strapped country. A decision on further funding is expected today, following talks held over the weekend in Brussels between Greek government officials and its creditors. On the macro front, the preliminary print of March’s German CPI figures will attract some attention today. The annual inflation rate is expected to register a rise for the second consecutive month. Traders will also keep a tab on the Euro zone’s consumer morale reading for further direction.
The Euro traded higher against the major currencies in Friday’s trading session. Data released on the last day of the week showed that consumer confidence in France was in line with market expectations for March. Italy’s industrial orders and sales fell for January, led by a decline in both domestic and foreign demand.
Other Currencies – Highlights
The Canadian Dollar is trading lower against the US Dollar this morning, ahead of the release of key economic data in Canada and the US. Canada’s industrial product price and raw materials price index, both for February and US personal income and spending data and pending home sales data for February are slated for release today. Market participants expect the prices of industrial products in Canada to rise for the first time in six months for February. Going forward, traders will keep a tab on Canada’s GDP growth, for the month of January scheduled tomorrow. Real GDP grew more than expected in the fourth quarter of the last year led by strong inventories accumulation. It will be interesting to see if growth in January is able to clock a rise similar to that in the month of December, as expected.
Last week, BoC Governor, Stephen Poloz, stated that the central bank was closely monitoring oil prices to keep inflation near its 2% target. He added that the bank’s further course of action on interest rates would be data dependent. Previously, the BoC in its January monetary policy meeting had unexpectedly cut its interest rate to 0.75% from 1%.