Morning Report: 9 April 2015

9th April 2015 By: Ranko Berich

GBP Sterling pushed higher against USD yesterday morning and afternoon, but during the evening lost most of its gains on developments in the US. Fundamental data was light, although the British Retail Consortium released its Shop Price Index, which showed a 2.1% drop in prices, year on year. The Bank of England’s Credit Conditions Survey concluded that on the whole, availability credit to households had remained broadly unchanged in the three months to March, while unsecured credit increased. Today will see the release of Trade Balance data for February at 09:30 BST, followed by the Bank of England’s Official Bank Rate announcement at 12:00. No change is expected from the Bank.

EUR The euro weakened noticeably yesterday, amid weak data and ongoing political posturing over the Greek debt situation. German Factor Orders fell 0.9% in February, continuing the fall seen in January. Later in the morning data showed that the retail industry in the euro zone continues to struggle, with the Retail Purchasing Managers Index remaining indicative of overall contraction. Retail Sales figures for February supported this conclusion, showing an 0.2 fall in sales after strong 0.9% growth previously. In the meantime, Greek Prime Minister Alixis Tsipras met with Russian President Vladimir Putin. Ostensibly the meeting was about building diplomatic ties between the two nations. A cynical observer might speculate that Tsipras was making a point to his European creditors that should Greece fail in negotiations for a better package from the eurozone, it could turn to Russia as a geopolitical ally.

USD Meeting minutes from the Federal Reserve saw the dollar appreciate yesterday, as they were more hawkish than the fairly dovish official Fed statement last month. Though the minutes themselves contained no new information, it did show that several members of the rate-setting Federal Open Markets Committee were still in favour of a June rate hike, which gave a boost to the dollar. The performance of the economy will clearly be the deciding factor, and so US data will continue to drive dollar developments. Interestingly, William Dudley of the powerful New York Fed gave a speech and said that the Fed was not taking the disappointing recent payrolls report too seriously, as cold weather conditions likely impacted performance. Today at 13:30 BST, weekly Unemployment Claims will be released, followed at 15:00 by Wholesale Inventories.

CAD Although the Canadian dollar did weaken last night on developments in the US, USD/CAD remained very much within recent trading ranged. Today will finally see the drought of CAD data broken, with housing market data including Building Permits and the New House Price Index scheduled for release at 13:30 BST.

UK news

  • Reuters. UK banks see demand for mortgages picking up in second quarter – BoE survey: British banks expect demand for mortgages to rise in the next three months, a Bank of England survey showed, in another sign the housing market is regaining speed.
  • Daily Mail. Bank of England warns UK’s £98bn current account deficit could trigger panic in markets if economy deteriorates: The Bank of England has warned that the UK’s £98bn current account deficit could trigger panic in the markets if the economy deteriorates.
  • Guardian. UK businesses report slower growth in first quarter of 2015: British Chambers of Commerce’s survey of 7,500 firms shows growth in domestic sales and exports slackened, raising doubts about underlying health of economy.