Another day another Dollar
The CBI retail sales index yesterday declined to -8 for March from 8 previously. Sales were undermined by adverse weather conditions and weak sentiment as retailers were disappointed, looking for a modest rebound in April. The data reinforced concerns over retail spending trends and the Bank of England Agents’ survey suggested signs of distress in the sector. Further, the survey reported increasing recruitment difficulties, although there was only limited upward pressure on wages.
Month-end selling and concerns that the upside potential of the currency is already priced in meant that Sterling buying was hampered. The Euro found support above 1.1430 whilst the Pound retreated to below 1.4100 against the stronger Dollar.
It’s a slightly busier market for Sterling today with the final GDP growth and current account deficit figures for the fourth quarter of 2017 due.
Today also marks one year until Brexit is due to officially happen.
Yesterday saw some important US data. Goods exports rebounded in February as expected, but imports also picked up. Exports of industrial supplies, capital goods and autos increased moderately, while exports of consumer goods and foods, feeds & beverages declined. For imports, most categories showed a decent increase except for ‘other goods’.
Against the backdrop of receding global trade war fears and positive geopolitical developments, yesterday’s bullish US GDP growth figures, which showed that the economy expanded at an annualized pace of 2.9% in the last quarter of 2017, helped limit immediate downside.
The market now looks forward to a flurry of US economic releases, including the core PCE price index (the Fed’s preferred inflation gauge), personal income/spending data, usual initial weekly jobless claims, Chicago PMI and revised UoM consumer sentiment.
In the meantime, the preliminary German CPI figures, along with the final UK Q4 GDP print and current account data, will influence the price dynamics during the European session.
There were no major Eurozone data releases yesterday as the Euro was hampered by concerns over growth momentum and a stronger Dollar. Weak sentiment surrounding the Eurozone could lead to a very cautious European Central Bank (ECB) stance in relation to tightening monetary policy.
The Euro saw a downfall of around 120 pips against the Dollar yesterday as upwardly-revised US GDP growth figures hampered Euro buying. The pair found some support near the 1.2300 handle and prevented further loss.
Investors today will confront the release of preliminary German CPI data.
Data to Watch:
08:00 CHF KOF Leading Indicator (Mar)
09:00 EUR Unemployment Change (Mar)
09:00 EUR Unemployment Rate s.a. (Mar)
09:30 GBP Gross Domestic Product (YoY) (Q4)
09:30 GBP Gross Domestic Product (QoQ) (Q4)
09:30 GBP Mortgage Approvals (Feb)
13:00 EUR Harmonised Index of Consumer Prices (YoY) (Mar)
13:30 USD Personal Spending (Feb)
13:30 USD Core Personal Consumption Expenditure – Price Index (YoY) (Feb)
13:30 USD Personal Consumption Expenditures – Price Index (MoM) (Feb)
13:30 USD Core Personal Consumption Expenditure – Price Index (MoM) (Feb)
13:30 USD Personal Consumption Expenditures – Price Index (YoY) (Feb)
13:30 USD Personal Income (MoM) (Feb)
13:30 USD Continuing Jobless Claims (Mar 16)
13:30 USD Initial Jobless Claims (Mar 23)
14:45 USD Chicago Purchasing Managers’ Index (Mar)