US NAHB Housing Market Index in Focus
Major focus will be on today’s report by the National Association of Home Builders which indicates the trend in the housing market for the US. Data is anticipated to show that housing activity climbed slightly higher from the level recorded in the previous month. Also on tab will be multiple speeches by key US Federal Reserve (Fed) officials for further inputs on the central bank’s stance on rate increases this year.
Today, the economic calendar remains empty in the Euro region and the UK. Earlier today, data revealed that house price growth in the UK remained steady in April. Meanwhile, investors will look forward to a publication of the German Bundesbank’s monthly report scheduled later today.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against the US Dollar and the shared currency this morning. The recent meeting by major oil producers in Doha over the weekend failed to reach an agreement to freeze output resulting in a decline in oil prices. Weaker oil prices have continued to suppress inflation rates away from the Bank of England’s (BoE) inflation target which has added pressure onto the central bank to delay any rate increase, raising possibilities of rate cuts instead. Earlier today, the report released by the property website, Rightmove, indicated that house price growth in the UK was steady in April at a similar pace to the previous month. This was due to a desperate rush to purchase buy-to-let properties as the stamp duty was raised by three percentage points.
With no major economic releases scheduled in the UK for today and tomorrow, direction in the Pound will be governed by global macroeconomic indicators. However, concerns over Britain’s exit from the European Union continues to weigh on the local currency.
US Dollar – US Markets
The US Dollar slid against its major peers on Friday following the release of lackluster US economic data. Headline industrial production fell more than expected in March, its sixth dip in the last seven months, weighed down mainly by a drop in mining and car manufacturing activities. The industrial output report followed the weak retail sales, business spending and wholesale inventories, suggesting that US economic growth almost stalled in the first quarter. Additionally, manufacturing output surprisingly declined in March to its weakest level since February 2015. Moreover, preliminary consumer sentiment deteriorated for the fourth consecutive month in April, as consumers expressed concerns over the pace of new job creation and inflation adjusted income expectations in the wake of the International Monetary Fund’s latest downgrade of global economic growth projections.
Moving ahead, the latest NAHB housing market index data, due later today, will be closely watched ahead of this week’s release of new residential housing construction and existing home sales figures. Investors will also focus on speeches by the New York Fed President, William Dudley and Boston Fed President, Eric Rosengren.
Euro – European Markets
The shared currency is trading on a stronger footing against the US Dollar and the Pound this morning. With no major economic releases scheduled later in the day, investor focus will be on today’s publication of the German Bundesbank’s monthly report which includes speeches, statistical tables and analysis of current and future economic conditions from the bank’s viewpoint. Against the backdrop of a cut to the economic growth outlook on Germany, it will be interesting to see if the Bundesbank expresses similar concerns. Going forward, investors will look forward to multiple ZEW surveys for the Euro zone and Germany along with the Euro zone’s current account data and construction output numbers scheduled for release tomorrow.
On Friday, data showed that the Euro zone’s trade surplus unexpectedly narrowed in February. Imports narrowed more rapidly than exports, hinting that the modest economic recovery for the Euro zone was largely supported by domestic demand amid waning global demand.
Other Currencies – Highlights
The New Zealand Dollar tumbled against the US Dollar early this morning as oil prices fell following yesterday’s Doha meeting in which major oil producers failed to agree on capping output to reduce the persistent global supply glut. However, the local currency recovered most of its losses following upbeat consumer inflation data for New Zealand. Consumer prices in the nation rose more than expected in the first quarter as increased prices of food, tobacco and household goods overshadowed weaker oil prices. This data has raised expectations that the Reserve Bank of New Zealand will refrain from taking further easing measures in its upcoming monetary policy meeting later this month after it surprised the global markets with a rate cut last month.
Going forward, tomorrow’s Global Dairy Trade price index will attract significant market attention ahead of April's policy meeting, as the economic indicator was one of the key influences to the central bank’s surprise interest rate cut in March.