Morning Report: 17 April 2015

17th April 2015 By: Ranko Berich

GBP Sterling’s rally against the dollar continued yesterday, but faltered against a resurgent euro. The Royal Institute of Chartered Surveyors reported their House Price Balance rose to 21%, indicating that a greater proportion of surveyors were reporting overall increases in prices in their areas. Today at 09:30 BST, labour market data including the Average Earnings Index and the Unemployment Rate will be released. Average Earnings are used to measure the growth of wages, and this will be the most important sterling release of this month. This is because the Bank of England is hoping that wage growth will soon accelerate and begin to stimulate inflation. Should wage growth slow further this will pose a serious challenge for the Bank’s monetary policy and put major pressure on sterling.

USD After a string of weak data releases the United States dollar is on the back foot. Yesterday’s data was also lukewarm: Building Permits and Housing Starts missed expectations, and weekly unemployment claims were slightly higher than expected. The Philly Fed’s Manufacturing Index beat expectations to rise to 7.5, indicating an increase in reported business activity by the surveyed managers. It’s also worth noting that although new jobless claims increased, continuing claims actually decreased substantially. Today at 13:30 BST, the Consumer Price Index will be released, providing an important snapshot of price pressure in the US.

EUR The euro also performed well yesterday, resisting weakness to sterling and advancing against USD. Euro data was scarce, although Italy’s trade balance rose higher into surplus, unsurprising consider the single currency’s recent devaluation. Speculation continued that Greece is running out of money and may soon be facing a government debt crisis, after the International Monetary Fund ruled out any delay in bailout repayments. Greece denied that it had even requested such an extension. Today at 10:00 GMT, the eurozone’s Consumer Price Index will be released.

CAD The US dollar’s loss has been the Canadian dollar’s gain this week, and loonie is now looking very good indeed. No data was released yesterday, but CAD’s rally continued with vigour. Today at 13:30 BST the Canadian Consumer Price Index will be released together, providing a sense check for the economy after the Bank of Canada’s Monetary Policy Report on Wednesday this week made an exceptionally optimistic assessment of the economy. Crude oil continued to rally, but this morning has already seen crude’s strength called into question with the release of an OPEC report stating that production has increased dramatically in March. With oil prices still very much in flux and major data due for release, today certainly has the potential for more CAD volatility.

UK News

  • Daily Mail. Annual house price growth has dipped every month since August report shows – but values still hit a record high: Property prices in England and Wales saw their smallest annual change in more than a year in March according to the latest monthly index from LSL Property Services.
  • Reuters. Osborne says IMF deficit forecast is reason to vote Conservative: Chancellor George Osborne said on Thursday an International Monetary Fund forecast that Britain is likely to miss his budget deficit forecasts means people should vote for the Conservative Party next month.