Morning Report: 31 March 2015

31st March 2015 By: Ranko Berich

GBP GBP heads into a busy day of data releases today on the back foot slightly, having weakened against USD yesterday. Bank of England Money and Credit statistics showed that Money Supply fell in its broadest measure by 0.2% in February, although narrower measures such as Net Lending to Individuals continued to expand, and mortgage approvals increased slightly. Consumer confidence as measured by research agency GFK increased markedly in March. Today at 09:30 BST, Current Account data for Q4 will be released together with the final revision of Gross Domestic Product growth during the same period. An easing in the UK’s deficit is expected, partly due to cheaper fuel costs. The Index of Services will also be released for the three months to January, as will Business Investment data.

EUR Today is a busy day for the euro, which has opened this morning with renewed weakness against USD and GBP. Yesterday, German CPI data for March showed inflation had fallen by less than expected, with prices rising 0.5% month on month, a continued recovery from January’s 1.1% fall. Today’s crucial release will be the Eurozone’s Flash estimate for Consumer Price Index inflation in March, which is due to be released at 10:00 BST. Either stability or improvement is expected in inflation compared to last month, with the risks for the euro weighted to the downside should another downward shock to inflation show up unexpectedly in the data.

USD Yesterday’s data for the United States was merely “good enough”, but the dollar did show some strength nonetheless. Consistent with the more moderate tone seen recently in US data, Personal Spending rose less than expected in February, although Personal Incomes rose healthily. The Core Personal Expenditures Price Index, an inflation measure favoured by policy makers in the United States, showed inflation rising at 0.2% in February. The year on year change was 0.3%, mainly reflecting lower fuel prices. Today will see a spattering of minor events for USD, with the Federal Open Market Committee’s Jeffrey Lacker and Dennis Lockhart speaking at 13:00 and 13:50 BST respectively. The Chicago Purchasing Managers Index will be released at 14:45, followed by Consumer Confidence figures from research agency the Conference Board at 15:00.

CAD Yesterday’s data showed a desperately needed recovery in key export prices for the Canadian economy, but it was of little avail to CAD which continued to weaken. The Raw Materials Price Index showed a 6.1% recovery month on month in February after a 7.5% plunge previously, while its equivalent index for Industrial products recovered 1.8% after falling 0.3% previously. The United States remains Canada’s key export market and the outlook here remains reasonably strong. Today at 13:30 BST, Gross Domestic Product growth for January will be released.

UK News

Reuters. UK consumer confidence hits 12-year high in March – GfK: British consumer morale rose to its highest level in more than 12 years this month, continuing an upward trend which economic polling company GfK said could boost Prime Minister David Cameron’s hopes of re-election in May 7’s election.

Reuters. UK mortgage approvals rise to six-month high in February: British mortgage approvals hit a six-month high in February, rising for a third straight month and suggesting the housing market could start to regain momentum, Bank of England data showed on Monday.

FT. BoE to stress test banks’ ability to cope in global crisis: Britain’s seven biggest lenders will be assessed on whether they could withstand a severe external shock including a Chinese property crash, a deep eurozone recession and the worst deflation since the 1930s.