Morning Report: 26 April 2016

26th April 2016 By: Ranko Berich

GBP For the third week in a row, sterling is continuing on its uptrend this morning. Yesterday’s data calendar was sparse, but the Confederation of British Industry did release its Industrial Order Expectations index, which read -11 for April. This indicates the surveyed manufacturers were experiencing falling order volumes, although the reading was slightly better than last month. The CBI had come under attack last week from Dominic Cummings, a director for the Vote Leave campaign, who called their polling figures “dodgy”. This morning at 09:30 BST BBA Mortgage Approvals will be released, and later this afternoon the Bank of England’s Jon Cunliffe will speak at 18:00 BST in London.

EUR The euro quietly appreciated against the US dollar yesterday, erasing most of its losses from Friday. This suggests that the euro weakness caused by last week’s European Central Bank meeting may prove fleeting. The widely watched IFO German Business Climate Survey was released, giving an index reading of 106.6 for April, broadly unchanged from last month, indicating a modicum of growth persists in the eurozone’s most important economy.

USD USD drifted lower against the euro and sterling yesterday, as anticipation continued to build for tomorrow’s crucial Federal Open Markets Committee meeting. New Home Sales fell slightly short of expectations for March, but the release passed without any major market reaction. Today’s release of Durable Goods Orders may have more of an impact: durable goods orders remain a good indicator of business and consumer confidence, and expectations are high after the contraction seen last month. Durable Goods orders will be released at 13:30 BST, followed at 14:00 by the CaseShiller House Price Index and 14:45 by the Flash Services Purchasing Managers Index from Markit. More survey data will be out later in the afternoon, with CB Consumer Confidence due at 15:00 alongside the Richmond Manufacturing Index.

CAD USDCAD looks like it may be forming something of a bottom, having failed to reach any new lows for the month over the last four trading sessions. No fundamental data was released yesterday and there is none scheduled for today. In the meantime, crude oil prices have been largely stable for the last couple of sessions. However, with an important US monetary policy decision tomorrow as well as Crude Oil inventories, volatility could return in the immediate future.

UK News

  • City A.M. UK economy slowdown expected to be confirmed this week with official GDP growth figures. The UK economy is expected to have recorded a marked slowdown in the first quarter of this year when official figures for GDP growth are released on Wednesday by the Office for National Statistics (ONS).
  • Reuters. UK banks approve fewer mortgages as new tax weighs. The number of mortgages approved by British banks in March fell to its lowest number since December, hit by the approach of a higher tax on buy-to-let properties, industry figures showed.