UK Q1 Economic Growth Remains Steady
The just published data indicated that the British economy continued to grow at a similar pace as previously estimated in the first quarter. Separately, data showed that UK mortgage approvals surprisingly fell in April. Additionally, retail sales in Italy, the third largest economy in the Euro zone, fell in March.
Across the Atlantic, investor focus will be on durable goods orders due for release later today. Market participants will eye the number of persons applying for first-time unemployment benefits in the US, along with pending home sales data and a quarterly survey by the Federal Reserve (Fed) Bank of Kansas City indicating the manufacturing activity in the Tenth District. Also, a couple of speeches by key Fed officials scheduled later today will attract considerable market attention.
Pound Sterling – UK Markets
The just out data showed that the second estimate of the UK’s Q1 GDP advanced in line with flash expectations. However, the nation’s GDP rose less-than-expected on an annual basis. Separately, the nation’s BBA mortgage approvals surprisingly declined in April. Moving ahead, investors will look forward to the UK’s GfK consumer confidence index data for May, due overnight, and is expected to post a further decline.
Although there were no major economic releases in Britain yesterday, that did not prevent the Pound from extending its recent gains after the latest string of poll results indicated that “Brexit” might be a no-show after all. Further adding to the heightened optimism was a report published by Britain’s leading tax and spending think-tank, the Institute for Fiscal Studies (IFS), warning that leaving the European Union (EU) would force British ministers to extend austerity measures by up to two more years in order to attain a budget surplus. While various organisations within as well as outside the UK have issued warnings highlighting the risks of leaving the EU, the IFS is the first one to assess its likely impact on the exchequer.
US Dollar – US Markets
The greenback lost ground against the shared currency and the Pound yesterday after the US service sector surprisingly deteriorated to a seven-year low level in May, sending warning signals of possibly muted economic growth in the second quarter. On the other hand, a separate report by the US Federal Housing Finance Agency showed that house prices in the country closed the first quarter of this year with the nineteenth consecutive quarterly gain. Moreover, the number of mortgage applications in the US rebounded last week, driven by gains in applications for both purchases and refinancing. Separately, the Dallas Fed President, Robert Kaplan, indicated that he would support two interest rate increases this year and also added that Britain’s vote on whether to leave the European Union will definitely weigh on the Fed’s June monetary policy decision.
Going ahead, investors will look forward to the release of US weekly jobless claims, pending home sales, durable goods orders, and the Kansas City Fed’s manufacturing activity index data, due later today. Additionally, two Fed members are scheduled to speak today.
Euro – European Markets
The shared currency is trading mixed against the greenback and the Pound this morning. Data released early during the day showed that seasonally adjusted Italian retail sales declined in March. On the other hand, a final reading of Spain’s first quarter GDP revealed that the nation’s economy remains on a steady growth path.
Yesterday, the Euro halted a two-day losing streak against the US Dollar, following a slew of upbeat data releases from Germany, the Euro zone’s largest economy. A forward-looking consumer confidence index report for June, published by the GfK research group, indicated that German consumers remained optimistic about the general economic situation and their propensity to buy in the coming months. Further, a key business survey showed that German business confidence strengthened above expectations to a five-month high level in May, as firms appeared satisfied with the current economic conditions and also turned optimistic regarding the months ahead. Separately, Italian industrial orders declined for the first time in three months in March, led by a drop in both domestic demand and export orders.
Other Currencies – Highlights
The Swiss Franc has reversed its previous session gains against the greenback this morning. Data released earlier during the day showed that Swiss industrial production rebounded in the first quarter. Further in the session, investor attention will shift towards the US data calendar, with the nation’s weekly jobless claims, durable goods orders and pending home sales data on the cards in addition to a couple of speeches from the Fed officials. Next week, Swiss data releases include the nation’s Q1 GDP and real retail sales data along with the KOF leading indicator and the SVME Purchasing Managers’ Index for May.
Earlier during the session, the Swiss Franc trimmed its losses and ended higher against the US Dollar, following the release of a couple of optimistic reports in Switzerland. Data showed that the Swiss UBS indicator of private consumption trends advanced in April, mainly driven by positive trends in the nation’s domestic tourism and new car registrations. Additionally, a separate report published by Switzerland’s Centre for European Economic Research showed that business expectations further improved in May.