Data just released showed that March retail sales in the UK fell unexpectedly from the previous month. Sales excluding fuel, was also lower than market expectations for the same period. A report on public sector finances showed that the budget deficit for the fiscal year ended March narrowed more than forecast.

Across the Atlantic, market participants will keep a tab on the preliminary print of Markit manufacturing PMI and new home sales to gauge the strength of the economy in the second quarter. In the Euro zone, the flash manufacturing and services PMI numbers surprised to the downside, thus fueling concerns about the health of the region’s economy.

Pound Sterling – UK Markets

Data just released revealed that on a monthly basis, retail sales in the UK fell unexpectedly for March, despite the sector receiving a boost from Easter holidays. Sales excluding fuel rose slower than expected. This came as a surprise, especially after recent BRC sales numbers suggested that March had been a good month for the retail sector. Another report showed that Britain’s budget deficit for the fiscal year ended March narrowed more than forecast.

Sterling traded higher against the major currencies yesterday, with the Pound moving above the 1.50 mark against the US Dollar. The minutes from the BoE’s recent monetary policy meeting showed that the nine member committee voted in unison to keep rates steady at 0.5% and agreed to make no changes in its asset purchase programme. The tone from the policy makers appeared to be slightly less dovish as they acknowledged that strong economic growth in the nation was unlikely without pushing up prices and wages. The print indicated that the central bank officials anticipate a pickup in inflation eventually, as the temporary downward pressure on prices eases.

US Dollar – US Markets

Erasing its earlier losses, the US Dollar traded firmer against the Euro yesterday following upbeat US home sales data. Sales of previously owned homes for March rose to its highest level since September 2013, signaling strong underlying demand in the US housing market. Data also indicated that supplies in the housing market had slightly improved, thus boosting confidence among traders ahead of the spring selling season. Also, a report from the Mortgage Bankers Association raised prospects for future housing demand after it indicated that the number of applications for loans to purchase homes jumped for the last week.

The US Dollar has extended its gains and continues to trade higher against the Euro, this morning, with market participants looking forward to today’s new home sales numbers for further evidence that demand in the US housing market improved for March. Also, today’s preliminary print of Markit manufacturing PMI will attract attention in the US, as traders look for cues to gauge whether economic growth in the nation has improved in the second quarter of this year.

Euro – European Markets

A string of manufacturing and service PMI numbers from the Euro zone and its various economies today have shifted investor focus from Greek debt woes to the extent of improvement in economic conditions in the region. The Markit PMI numbers released earlier in the day were disappointing, as the preliminary print showed that manufacturing and service sector activity for April slowed in both Germany and France. The initial estimates unexpectedly dropped for both the economies, despite supporting factors such as low oil prices and a weak Euro that were expected to drive improvement in industrial activity in Europe. Data also suggests that these economies are yet to experience the benefits of the ECB’s quantitative easing programme. Following downbeat PMI readings, the Euro has moved further lower against the US Dollar.

The Euro traded on a weaker footing against the major currencies yesterday, as the single currency remained under pressure amid concerns that Greece might not be able to reach an agreement with its creditors in Friday’s meeting.

Other Currencies – Highlights

The Swiss Franc lost ground against most of the major currencies yesterday after the Swiss National Bank announced that it would reduce the number of public accounts that are exempted from negative interest rates. The SNB stated that only sight deposit accounts of the central Federal Administration and the compensation funds for old age and insurance will be exempted. At its March monetary policy meeting, the SNB Chairman, Thomas Jordan had stated that exceptions to charges on Franc deposits are not in the central bank's interest because it weakens the effectiveness of monetary policy.

The Swiss Franc has gained ground against the USD this morning after data released earlier today revealed that Switzerland’s trade surplus widened for March was boosted by an increase in exports. Moving ahead, market participants will keep a tab on the flash manufacturing PMI and new home sales data in the US, for further direction. In other economic news, ZEW survey showed that Switzerland’s economic expectations index for April improved from the previous month.