Morning Report: 14 April 2015

14th April 2015 By: Ranko Berich

GBP Sterling resisted further losses to USD yesterday, ahead of crucial inflation data today. The Consumer Price Index will be released at 09:30 BST, together with price indices for houses, the retail sector, and producer prices. Headline CPI could well slip into negative territory today, driven down by falling fuel and food prices. Although sterling would likely be put under pressure by such a development, in the medium term negative inflation will not prompt an immediate response from the Bank of England, which has signalled a willingness to ignore temporary shocks to inflation such as falling fuel prices. Core CPI, which excludes food and fuel, will be the more relevant inflation measure this morning for this reason, and if a deterioration is seen there the BoE is far more likely to consider a response.

EUR Euro data has had a feel good-factor to it of late, but the single currency’s resulting strength has been short lived, with the euro plunging further yesterday. This morning’s Industrial Production data at 09:30 BST can at best be expected to provide minor relief for the euro when released, although an improvement in production is expected. The improvement in eurozone data is largely down to the European Central Bank’s ongoing quantitative easing programme, which has seen government debt yields fall across the eurozone, resulting in easier credit conditions and improved business confidence.

USD The US Dollar Index benchmark once again failed to break through the key psychological level of 100.00 yesterday, retreating after reaching a high of 99.9. Trading against sterling and the euro followed a similar pattern. The dollar’s failure to break this value suggests some hesitance on the part of markets to continue to appreciate USD in the face of cooling data and a cautious Federal reserve. Today at 13:30 BST, Retail Sales data for March will be released. Consumer spending has been somewhat dormant after a bumper holiday shopping season last year, but hopes are high for today’s figures, with median forecasts for 1.1% month on month growth. The Producer Price Index will also be released at this time.

CAD Despite some high intraday volatility CAD ultimately closed quite close to where it opened against USD yesterday. No CAD data was released, and none is scheduled for today. The next major event for CAD is the Bank of Canada’s Monetary Policy Report and rate announcement, tomorrow at 15:00 BST.

UK News

  • FT. Companies cut budgets over election concerns: Britain’s chief financial officers are increasingly concerned they could be facing unpalatable policy outcomes whoever wins the general election and are reining back on investment.
  • Reuters. Cameron pledges to expand ‘right-to-buy’ scheme to woo voters: Prime Minister David Cameron will use the launch of his party’s policy manifesto on Tuesday to woo voters with a “Conservative dream” that would allow more than 1 million poorer families to buy their own homes at a discount.
  • Reuters. UK retail spending rises at fastest rate in almost a year – BRC: British retail spending rose at its fastest annual rate in almost a year last month, boosted by Easter falling a month earlier than in 2014, an industry body said on Tuesday.
  • Telegraph.  Fear of 1970s-style electoral chaos to hit UK assets: Worries that a inconclusive election result this May could result in another vote by the end of the year have scared off international investors, City experts are warning.