US Durable Goods Orders and Services PMI Data Eyed
With the 2-day US Federal Reserve’s (Fed) monetary policy meeting set to commence today, investors will closely eye the US preliminary services PMI reading which is anticipated to show that the nation’s services activity picked up pace in April. Separately, data is expected to indicate that durable goods orders in the world's largest economy bounced back in March following a drop in the previous month. Also, US consumer confidence data along with a survey by the Richmond Fed revealing the manufacturing activity in the region will be closely watched later today.
Today, the economic data calendar remains empty for the Euro region. Meanwhile, the just out data in the UK showed that the number of home loans issued by the British Bankers' Association unexpectedly dropped in March.
Pound Sterling – UK Markets
The number of home loans approved by the British Bankers' Association (BBA) in the UK surprisingly fell in March. Going ahead, the advanced reading of Britain’s Q1 gross domestic product data, scheduled for release tomorrow, will be keenly watched by market participants, wherein a slight drop-off in domestic economic activity is expected.
Yesterday, Sterling hit its highest level against the US Dollar since mid-February as Brexit worries ebbed following the US President Barack Obama’s remarks over the weekend, urging Britain to stay in the European Union. In the economic data space, the Confederation of British Industry’s (CBI) order book balance, which measures the economic expectations of manufacturing executives in the UK, surprisingly improved in April. Moreover, export orders logged in its highest reading since August 2015. The data overall suggested that manufacturing and export prospects in the UK have improved lately. Additionally, the CBI trends selling price index rebounded during the same month. However, the CBI business optimism index further declined in April.
US Dollar – US Markets
The greenback traded lower against its major peers yesterday as a surprise drop in US new home sales for March dampened optimism over the health of the nation’s housing market and further underscored the view of weak economic growth in the first quarter. Data showed that sales of new, single-family homes declined for the third consecutive month in March, with losses mainly concentrated in the western region. The new home segment is crucial for the economy as building of new homes helps generate jobs for construction workers and also boosts demand for materials such as lumber and bricks. Moreover, the Dallas Fed manufacturing index dropped for the 16th consecutive month in April, echoing the subdued outcomes of the Markit Manufacturing PMI and the Philly Fed index released last week.
Moving ahead, today is a jam-packed day for economic data releases in the US. Durable goods orders will be released later today along with a key reading on the manufacturing sector, services PMI as well as the Conference Board’s consumer confidence and the S&P/Case-Shiller home price index data.
Euro – European Markets
Yesterday, the Euro halted a four-day losing streak against the US Dollar, as the greenback remained subdued across the board following the release of downbeat US new home sales data. Meanwhile, investors looked past the less-than-ideal German Ifo survey data releases for April. The business climate index surprisingly weakened during the month, in the wake of comments by Bundesbank last week predicting a slowing momentum in the nation’s economic growth over the second quarter. The main market moving events this week are the US Fed and the Bank of Japan’s (BoJ) monetary policy decision, which will have a significant impact on the greenback and will eventually affect the Euro - US Dollar currency pair.
With no major economic data scheduled today, investors will closely watch key releases in the Euro zone and in Germany later in the week for further direction. Major focus will be on the Euro region’s unemployment rate and preliminary reading of its consumer price inflation data later in the week. Also on tab will be German consumer price inflation data along with the unemployment rate.
Other Currencies – Highlights
The Kiwi dollar has been steadily climbing this morning and is inching closer to the crucial 0.69 mark, as a rebound in oil prices lent support to the commodity linked currency. Last week, it registered three consecutive days of sharp decline. On the data front, the New Zealand trade balance for March is scheduled for release overnight. Expectations are for the trade surplus to expand on a monthly basis, while the year-to-date balance deficit is projected to worsen. Market participants will also eye a slew of data releases in the US later today for further direction in the currency pair.
Looking ahead, the Reserve Bank of New Zealand’s (RBNZ) interest rate decision which is due tomorrow is sandwiched between the US Fed and the BoJ monetary policy announcement. While the RBNZ and the Fed are widely expected to hold interest rates steady, the BoJ might expand its asset purchase programme to spur economic growth. Other data releases in New Zealand this week include building permits and business confidence data for March.