Civil engineering cools investors nerves
GBP – UK construction PMI index came out better than expected with a small increase to from the previous month. There was a major slowdown in the house-building sector whilst there was an improvement in civil engineering sector which should offer some reassurance over investment trends. Weaker commodity prices had some negative impact on the pound yesterday as it remained defensive mode, although there was some support at the 1.2250 level against the dollar and resistance was eyed at 1.1625 versus the Euro. The UK services sector PMI index will be watched closely on today for further evidence on trends in growth and inflation which will have important implications for monetary policy.
EUR – Euro-zone consumer inflation rose to 2.0% for February from 1.8% previously, and was in line with expectations, despite being the strongest reading for four years. Unemployment held at 9.6% for January with markets waiting for any signal of a policy change from the European Central Bank (ECB) coupled with any inflation data which in the short term hasn’t proved to increase volatility surrounding the shared currency. The policy is expected to remain on hold at next week’s Council meeting, although comments from President Draghi will be watched closely. However, the European Commission has offered a white paper that suggests five future scenarios for the future of Europe. It will be a discussion point in the coming months, with Juncker’s State of the Union speech in September will likely focus on it before preliminary conclusions are made at the heads of state summit at the end of the year. Finally, ECB Executive Board member Sabine Lautenschlaeger said in an overnight speech that she did not expect France to leave the European Union, adding that she doubted there would be a stock market crash in the near future, as cited by Reuters.
USD – The dollar remained on track for a solid weekly gain as market participants placed their bets on the U.S. Federal Reserve will raising interest rates at its mid-March meeting, This led to a rise in U.S. Treasury yields and in turn carried on the dollar bull run. The dollar index, which gauges the greenback against a basket of six major currencies, was down 0.2 percent this was not far from the previous session’s high of 102.260, this, in turn, was its loftiest peak since Jan 2011. Against the yen, the dollar fell 0.3 percent on the day after reaching a peak of 114.59 on the day Tuesday, its highest since mid-February. Across the board, the dollar was up nearly 2 percent for the week.
Data due today
UK Markit Services PMI
- EU Markit Services PMI
- EU Retail Sales
- US Markit Services PMI
- US ISM-Non-Manufacturing