Morning Report: 17 March 2015

17th March 2015 By: Ranko Berich

GBP Sterling found its legs yesterday, and began to recoup recent losses against USD. The only fundamental data release was the Conference Board’s Leading Index, a composite of multiple economic indicators, which is designed to predict the future growth of the economy. The index rose 0.2% in January, after stalling previously. No UK data will be released today, and markets will be looking ahead to tomorrow’s government budget presentation and crucial labour market data.

EUR The euro appears to have found a floor against USD, and is resisting further weakness for now. European Central Bank president Mario Draghi struck an optimistic tone in a speech yesterday, stating the eurozone was enjoying “steadily recovering economic situation”, noting “growth forecasts have been revised upwards, and bank lending is improving on both the demand and supply sides”. The ECB chair has good cause for optimism, and this morning’s eurozone data is expected to add to the modestly positive news seen recently from the eurozone. Research agency ZEW will release Economic Sentiment survey data for the Eurozone and for Germany at 10:00 GMT, accompanied by official inflation data for the eurozone in February. Employment data for Q4 2014 will also be released.

USD The dollar’s seemingly inexorable appreciation stalled yesterday, and USD weakened only slightly against GPB and EUR. Markets may be unwilling to move USD any further until tomorrow’s FOMC statement. Some soft fundamental data was released yesterday, with Capacity Utilization falling unexpectedly, and industrial production growing only 0.1% in February after falling 0.3% previously. The Empire State Manufacturing Index, which tracks business activity and optimism in New York State, fell to 6.9 unexpectedly, disappointing expectations for growth while remaining well above the 0 level that indicates improving conditions. Today at 12:30 GMT, Building Permits and Housing Starts data will be released.

CAD CAD was volatile yesterday, gaining and losing ground as crude oil prices fell to new lows for the month. International securities purchases data showed that international investors had increased their holdings of Canadian securities in January, following divestment in December. Acquisition was largely centred in bonds, as investors hunted for yield in the wake of plummeting returns in the eurozone. Today at 12:50 GMT, Manufacturing Sales data will be released for January.

UK News

  • Telegraph. Budget 2015: George Osborne to announce £6billion boost to UK’s coffers: The Chancellor will announce a £6billion boost to the economy which he is expected to use to fund a series of Tory manifesto pledges that will see tax cuts for millions of middle-class families.
  • Reuters. UK to raise minimum wage by 3 percent, biggest rise since 2008: Britain’s minimum wage will rise by 3 percent to 6.70 pounds per hour, the biggest real-terms increase since 2008, Prime Minister David Cameron said on Tuesday, presenting the rise as a measure of economic strength before a May 7 election.
  • Daily Mail. Osborne in £1m inheritance tax giveaway: Homeowners will be able to pass on property worth up to seven figures to their children tax-free under Chancellor’s plans: Homeowners with properties worth up to £1million will be able to pass them on to their children tax-free under plans drawn up by George Osborne, it was claimed last night.