UK’s Services PMI Reading Nudges Higher
After a long Easter weekend, today’s robust services PMI data, which showed that activity in Britain’s dominant services sector expanded at a firmer pace for March, offered some relief to Sterling investors. Latest PMI releases have confirmed that private sector activity remained buoyant last month despite muted inflation in the nation. In the Euro zone, final data revealed today that the region’s services PMI reading was unexpectedly revised down for March, in contrast to last week’s upbeat manufacturing PMI report.
Across the Atlantic, after Friday’s soft labour market print showed that the number of job additions in the US economy were weaker than expected for March, yesterday’s subdued ISM non-manufacturing PMI reading failed to allay concerns among greenback investors.
Pound Sterling – UK Markets
The just out data has shown that activity in Britain’s services sector grew at a firmer than expected pace for March. Considering that the services sector accounts for the major portion of the nation’s economy, an upwards movement in today’s data has strengthened expectations that activity in the UK continues to remain buoyant, despite the weak growth in domestic consumer prices. However, the Pound has lost ground against the greenback despite the release of today’s upbeat services PMI reading. With no other notable macro triggers in the UK today, investors' focus is likely to shift to Thursday’s trade report, to verify if an elevated Sterling weighed on the nation’s export growth for February.
On Thursday, the Markit PMI report released in the UK showed that the activity in the nation’s construction sector expanded at a slower than expected pace for March. The print revealed that a lower availability of sub-contractors along with a constraint in material supplies pushed up input costs for builders, which weighed on the construction sector’s growth last month. On Friday, the Pound-US Dollar pair remained buoyed following the release of the downbeat US labour market report.
US Dollar – US Markets
Data released on Good Friday indicated that the US economy added fewer jobs for March, while the previous month’s job figures were revised down. The lower than expected job growth indicated that the recovery in the labour market may have hit a wall during the latter half of the first quarter. However, the unemployment rate remained unchanged for March and the average earnings were slightly higher for the last month. The US Dollar continued to trade lower against its major counterparts yesterday in response to Friday’s weak employment report. On expected lines, the ISM data released yesterday showed that the nation’s service sector continued to expand but at a slower pace for March. Meanwhile, the New York Fed President, William Dudley, yesterday signalled a possible delay in the timing of the interest rate rise following a string of disappointing economic data in the US.
The US Dollar has reversed its earlier session losses and is trading higher against the Euro and the Pound this morning, ahead of the consumer credit report for February, due later today.
Euro – European Markets
The Euro dropped below the 1.10 mark but traded higher against the US Dollar in yesterday’s trading session. Currency markets witnessed muted trading activity yesterday session as major European markets remain closed for Easter holiday. Encouraging news from the Greece supported the single currency. Following a meeting with IMF officials, the Greek Finance Minister, Yanis Varoufakis stated that the nation would make a loan payment due to the IMF later this week. He also stated the government’s intention to meet all obligations to its creditors and reform the economy. Last week, the Greek government had submitted a new list of reforms in the hope of unlocking funds, but it has yet to arrive at an agreement on the proposals with its EU and IMF lenders.
The Euro has lost ground against its key peers this morning after the final print of the Markit services PMI, released earlier in the day, came in a shade short of the preliminary estimate.
Other Currencies – Highlights
The Reserve Bank of Australia (RBA) held the official cash rate at its record low level of 2.25%. The news led the Australian Dollar to fresh weekly highs against the US Dollar, to just below the 0.77 mark. In the statement accompanying the decision, the central bank stated that further depreciation in the exchange rate seems more likely, particularly due to the significant decline in key commodity prices. The RBA indicated that further easing of policy may be appropriate going ahead, in order to foster sustainable growth in demand and inflation consistent with the target. Going forward, the RBA is likely to wait for more information from Sydney’s property market, as well as the latest employment and inflation data, due later this month, before deciding on rates next month.
Prior to the release of the RBA’s interest rate statement, the Australian Dollar was supported by upbeat retail sales data for February. The seasonally adjusted retail sales figures came in higher than market expectations as consumers spent more on household goods, restaurants and clothing.