Pound stays level-headed
Sterling remained on the up yesterday against its major rivals going into the publication of the UK retail sales data. The Office for National Statistics released its February retail sales figures yesterday which came out stronger than expected at 1.4% up on the month and up 3.7% on the year. Following this, Sterling rallied further shown by GBPEUR trading above the 1.1600 level, and GBPUSD also climbing to the 1.2500 area.
The Bank of England’s Gertjan Vlieghe stated in a press article said that higher inflation didn’t necessarily mean an interest rate increase. He wants evidence of strong wage growth before considering voting for a rate hike.
Later today, only the BBA loans for Home Purchases are scheduled for release.
US new home sales data was stronger than expected at an annual rate of 592,000 for February after 558,000 the previous month. The impact was offset to some extent by an increase in jobless claims to 258,000 from a revised 243,000 previously. However, underlying labour market trends remain firm.
San Francisco Fed President Williams stated that three or four rate hikes would make sense during 2017 and Dallas head Kaplan also commented that three rate hikes for 2017 would be appropriate. The Dollar overall was confined to narrow ranges with the Euro hitting resistance above 1.0800 and drifted to 1.0760 on Friday as the US currency gained wider support.
German consumer confidence printed slightly lower yesterday, however, consumer confidence for the Eurozone as a whole was up on last month.
The European Central Bank allocated far more than expected in the latest Long Term Refinancing Operation (“Bond Purchase Scheme”) at EUR 233.5bn. There is strong demand for cheap credit (bond purchases) fuelled by the fact that it is the last scheduled auction as the central bank is not expecting to extend the programme.
The PMI data will be monitored closely on Friday for further evidence of underlying trends and inflationary pressure further down the line
The Swissy (CHF) slipped slightly yesterday before finding support just below 1.0700 versus the Euro, and versus the U.S Dollar it consolidated below the 0.9950 level. Swiss National Bank (SNB) Board member Maechler reiterated that the Swiss economic recovery is still not wide ranging and that the Franc remains considerably overvalued. However, she had strong confidence in the bank’s policies. The Franc edged lower as equity markets stabilised and expectations of very negative Swiss interest rates continued to sap support for the currency.
Data to watch: 8:30 EUR German Markit PMI Composite, Manufacturing PMI, Services PMI (Mar). 9:00 EUR Markit PMI Composite, Manufacturing PMI, Services PMI (Mar). 12:30 USD Durable Goods Orders & DGO ex Transportation (Feb). 13:05 USD Fed’s Bullard Speech. 13:45 Markit Manufacturing PMI (Mar). USD US Congress votes Healthcare Bill