Morning Report: 23 April 2015

23rd April 2015 By: Ranko Berich

GBP Sterling surged to reach its strongest point against the US dollar in more than a month yesterday, although some retracement has been seen since then. Yesterday’s Monetary Policy Committee meeting minutes enabled the bull run, as markets seized on the fact that the majority of members believed the Bank of England’s next move would be a rate hike. In fact the minutes showed a much more cautious MPC, which assumed that wages and inflation would grow in the coming quarters and which would therefore hike interest rates. However, rates hikes are entirely conditional on this chain of events occurring as planned, and with inflation and wages both still exceptionally sluggish the BoE is likely to continue to exercise extreme caution. Today at 09:30 BST, Retail Sales will be released together with Public Sector Borrowing.

EUR The euro enjoyed a burst of strength yesterday morning which quickly faded in the afternoon. Official Consumer Confidence figures from Eurostat showed confidence dropping further into negatives. Today will see ample euro data releases, with French Purchasing Managers Index data showing a deterioration in optimism from survey respondents. German PMI data will be out at 09:30 BST, followed by data for the eurozone as a whole at 09:00.

USD The dollar took somewhat of a back seat yesterday, weakening to sterling and trading sideways against the euro. Housing Market data showed that prices across the whole economy expanded at a healthy rate of 0.7% in February, despite frigid weather conditions. Existing Home Sales were equally buoyant, rising to their highest level since 2013. Today at 13:30 BST, weekly Unemployment Claims will be released, following by the Manufacturing Purchasing Managers Index at 14:45 and New Home Sales at 15:00.

CAD CAD was volatile yesterday, at first strengthening consistently throughout the early hours of the morning before succumbing to choppy price action in the afternoon and evening. No Canadian data was released yesterday and none is scheduled for release today, so developments elsewhere, especially in oil markets, will be influential on CAD today.

UK news

  • FT. BoE hints at rate rise sooner than market expects: Sterling moved higher on Wednesday as minutes of the Bank of England’s rate-setting meeting contained a hint that rate rises may come sooner than the market expects.
  • FT. Carmakers buck UK low productivity trend: The UK may be suffering a productivity crisis but its carmakers are bucking the trend and enjoying record output per worker.
  • Daily Mail. Record low buy-to-let rates slip away but landlords investing pension freedom cash can still get a cheap fix: Record buy-to-let mortgage rates for landlords have edged back up in the last two months but are still far better than a year ago, research has shown.
  • Telegraph. ‘Noflation’ helps squeeze on household finances ease to six-year low: Low inflation boosts household finances, but expectations for wage growth remain weak.