Morning Report: 27 April 2015

27th April 2015 By: Ranko Berich

GBP Sterling made some impressive gains on Friday to reach its strongest level against USD since early March. This morning at 11:00 BST, the Confederation of British Industry will release its Industrial Order Expectations index, which tracks anticipated orders via survey. The index is important because it’s a leading indicator, showing the expected growth of the economy in the future. This will be a big week for sterling, with the general election campaign continuing and important GDP data due for release tomorrow at 09:30 BST. Tomorrow’s GDP data will be the first release of the quarterly national accounts for Q1 this year, and so has the potential to have the greatest effect.

EUR The euro resisted two downwards moves last week, and has since rallied despite continued quantitative easing from the European Central Bank and ongoing political turmoil over the Greek debt crisis. Friday’s Eurogroup Finance Ministers meeting had plenty of drama, but no real signs of firm progress in negotiations. There were reports of Greek Finance Minister Yanis Varoufakis getting “hammered” verbally during the talks, but by the time of the press conference, none of the participants were willing to be drawn on substantive questions like what terms were proving problematic, or what the likelihood of success was. This Wednesday at 09:00 BST, M3 Money Supply data will be released for the eurozone, together with German Consumer Price Index inflation.

USD As little as two weeks ago the United States dollar was looking like reaching new multi-year highs, but since then weak US data and a rally in crude oil prices have created a substantial retreat. This week will see the US Federal Reserve respond to these developments, in its latest FOMC statement and rate decision. No press conference will follow the release, which is scheduled for 19:00 BST on Wednesday, but the FOMC statement may contain hints as to the Fed’s thoughts nonetheless. Today at 14:45 BST, Flash Services Purchasing Managers Index data for April will be released.

CAD CAD has stepped back slightly after Friday saw it reach its strongest level against USD since January. The Bank of Canada’s Governor, Stephen Poloz, once again emphasised how powerful the negative effects of weak oil prices have been on the Canadian economy, during a panel discussion in Washington. Friday afternoon also saw crude oil prices wobble, as if to underline Poloz’s point. This week will revolve around Friday’s Employment data for CAD, which will be released at 13:30 BST. Poloz will also testify before Canadian lawmakers on Tuesday at 14:45 and on Thursday at 15:30.

UK news

  • Reuters. Productivity puzzle to tax UK election victor: Less than two weeks away from a knife-edge election, Britain’s biggest economic problem, stagnant productivity, has barely surfaced in the political debate.
  • Reuters. Osborne avoids deficit slip-up, retail sales unexpectedly fall: Chancellor George Osborne met his latest deficit reduction target, avoiding embarrassment two weeks before the election, but weak retail sales figures raise the risk that growth has slowed.
  • Daily Mail. Support growth firms – not just trendy start-ups as medium-sized companies will boost jobs and the economy, MPs told: Business leaders will this week warn politicians they need to support growing firms and not focus only on fashionable start-ups.