Sterling beset by bearish sentiment
The Dollar proved the winner yesterday, gaining against all of its major peers after risk sentiment improved and commodities’ prices dropped. FED members James Bullard and Charles Evans suggested there should be a couple of interest hikes this year; encouraging confidence in the US economy.
Today, we have Initial Jobless claims and monthly Core Durable Goods Orders of note for the US. Initial Jobless Claims are forecast to print slightly worse than previous, along with durable goods orders also expected to dip to -0.2% for February. Poor data today could put a halt to the gains the Dollar has been making against its peers over the last four days, however.
With no Eurozone data releases yesterday, volatility in the Euro pairs came from the broader market sentiment. Brexit concerns have dragged Sterling down against the Euro and is currently trading at levels not seen since December 2014. The Euro weakened against the Dollar for the fourth day in a row. The pair opened yesterday morning at 1.1215 and continued on its bearish trend to open this morning 0.3% lower at 1.1180.
Today the European Union’s Economic Bulletin is due, providing comprehensive analysis of economic and monetary developments, staff macroeconomic projections on inflation, growth, public finances, and external trade. The EU Governing Council’s (Interest Rate setters) policy decisions are based on this report.
More volatility is expected for Sterling today albeit against a likely backdrop of lower volumes. Market consensus for UK retail sales data is 3.8% year on year and -0.7% month on month for February. The lead indicator, British Retail Consortium sales figure, released on March 7th, showed a marked slowdown from January. With the UK services sector being more than 3/4 of the UK economy, and retail sales contributing significantly to that; poor retail sales figures will likely negatively affect the Pound.
Data to watch: 9am EUR Economic Bulletin. 9.30am UK Retail Sales (MoM)(YoY). 10.15am EUR Targeted LTRO. 12.30pm US Initial Jobless Claims. Durable Goods Orders. 1.45pm US Markit Services PMI.