UK Retail Sales Data on Tab
Earlier in the day, data showed that German business sentiment unexpectedly deteriorated in April. This was due to a surprise drop in the business climate index of the Ifo survey, which indicates overall economic health in Germany. Meanwhile, the CBI Industrial Trends Survey in the UK scheduled for release later today will attract significant market attention.
Going forward, investors will look forward to a couple of economic releases in the US for further direction. The number of new home sales along with the Dallas Federal Reserve’s (Fed) manufacturing business index, scheduled for release later in the day, will be eyed by market participants.
Pound Sterling – UK Markets
The Pound is trading higher against the US Dollar this morning. Last week, the round of UK economic data came in highly disappointing, with an unexpected rise in unemployment claims followed by dismal retail sales data. It is likely that a momentum shift-back in favour of the UK staying in the European Union (EU) is lending support to the Sterling at present. Elsewhere, at a joint news conference with the UK Prime Minister, David Cameron, the US President, Barack Obama voiced his support for Britain remaining a part of the EU. At the start of a new week, the CBI industrial orders expectations index for April, scheduled for release in some time, is expected to post a continued decline. Additionally, the CBI selling price and business optimism indices for April, are also on tab.
The highlight this week will be the UK’s preliminary GDP data which is expected to confirm that the nation’s recovery lost some pace in the first quarter, if recent lacklustre UK data is taken into consideration.
US Dollar – US Markets
The greenback is trading on a weaker footing against its major peers this morning, ahead of the US new home sales and Dallas Fed manufacturing business index data, scheduled for release later today. New home sales for March are expected to grow at a slower pace compared to the previous month. Additionally, manufacturing activity in Dallas is likely to post a decline for the 16th consecutive month in April. In the week ahead, market participants will focus on the Federal Reserve’s (Fed) monetary policy meeting. Although policymakers are expected to hold interest rates steady, investors will look out for clues on the path of future interest rate increases.
On Friday, a reading of manufacturing sentiment in the US surprisingly declined to its lowest level in six-and-a-half years. The latest manufacturing update followed mixed regional results so far this month. The New York Fed’s report for April jumped to its highest level in a year, whereas last week’s Philadelphia Fed manufacturing index posted a contractionary reading after a solid gain in March.
Euro – European Markets
Earlier today, the release of the Ifo Institute’s survey numbers on business sentiment and economic outlook based on a wide range of businesses in Germany, stirred market interest amid no other data releases across the Euro region today. The Ifo’s business climate index slightly deteriorated in April against market expectations for an improvement, hinting that Europe’s largest economy is losing steam. The recent deterioration in sentiment in the wholesaling and retailing sectors drove the downward trend. Even though China has shown signs of steadiness, global headwinds continue to pose problems. However, the German Ifo survey report indicated that its expectations gauge for the next six months rose in April, rising for a second consecutive month but below market estimates.
The Euro traded on a weaker footing against its key currency counterparts on Friday after the first print of the Euro zone’s manufacturing and services PMI showed that business activity in the region’s private sector unexpectedly weakened in April.
Other Currencies – Highlights
On Friday, the Japanese Yen hit a two-week low against the greenback, with the US dollar currency pair trading above the crucial 111.00 mark. The Japanese Yen weakened amid speculation that the Bank of Japan (BoJ) could implement further stimulus measures at this week’s monetary policy meeting in order to kick-start Japan’s sluggish economic growth. In January, the BoJ threw caution to the wind and adopted negative interest rates for the first time, with an aim to boost inflation, but did so in vain. On the data front, manufacturing conditions in Japan worsened in April, with a sharp decline in both production and new orders. Total new orders contracted at the fastest pace in over three years.
The Japanese Yen trimmed most of its losses and turned positive against the greenback this morning. Earlier during the day, data indicated that Japan’s final leading economic index for February declined to its lowest level since early 2010, painting a bleak picture for the nation’s revival. Meanwhile, the coincident index showed a modest rise compared to its preliminary reading.