Morning Report: 21 April 2017

21st April 2017 By: Ranko Berich

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GBP. Sterling had a volatile day yesterday, and saw several major swings and roundabouts against its major partners, particularly USD, before ultimately closing slightly down against the greenback. Campaigning for the upcoming General Election was in full force, but none of the headlines seemed to have a sustained effect on the pound, and no fundamental data was released. The lack of truly top tier data releases this week ends today, with Retail Sales at 09:30 BST. Retail sales bounced back in March after several months of poor results. If the deterioration resumes today, concerns about the health of consumer spending, the major driver of the UK economy over the last few years, are likely to intensify.

EUR. The euro looked like breaking higher against USD briefly yesterday, but the greenback found its legs and EURUSD ultimately closed little changed on the day. Yesterday’s only major release was eurozone Consumer Confidence, which was slightly less negative than the survey’s last release. German Finance Minister Schaeuble repeated his call for the European Central Bank to end its ultra-loose monetary policy, which has been unpopular in the German political establishment, and has increasingly been questioned by a minority of ECB decision makers. Although the French election will likely dominate today’s euro trading, a number of important data releases are scheduled, including French and German Purchasing Managers Indices for the Services and Manufacturing sectors, culminating in the eurozone wide release at 09:00 BST, accompanied by the eurozone’s Current Account.

USD. USD rallied again yesterday, leaving the green back solidly range bound this week as every major fall has been followed by a period of retracement. Yesterday’s data offered few clues as to the ultimate direction of the dollar. The Philly Fed Manufacturing Index did indeed deteriorate, but remained indicative of overall growth among the surveyed businesses, while weekly Unemployment Claims remained very low at just 244,000. The Conference Board’s Leading Index, a composite of forward looking indicators, rose 0.4%. No headline USD data will be released today apart from Manufacturing and Services Purchasing Managers’ Indices at 14:45 BST. The Fed’s Kashkari will speak beforehand at 14:30, and Existing Home Sales will be released at 15:00.

CAD. After several days of sharp, consistent losses the loonie finally managed to stabilise yesterday, and is trading slightly up from yesterday’s low versus USD this morning. This afternoon’s fundamental data may offer the loonie a chance to continue to pare back its losses from the week, with the Consumer Price Index set for release at 13:30 BST.

UK news

FT: France launches terror probe after Paris shooting. Champs-Élysées attack threatens to disrupt presidential election. France has launched an anti-terror investigation after a policeman was killed and two other officers injured in a suspected Islamist attack in Paris on Thursday that threatens to disrupt the country’s presidential election. French authorities said the suspected gunman had been shot dead in the assault on the Champs-Élysées shortly before 9pm local time. One civilian was also injured in the attack. “We are convinced that the leads in the investigation are terror-related,” President François Hollande said late on Thursday.

Bloomberg: U.K. Retail Sales Post Biggest Quarterly Drop Since Early 2010. Retail sales recorded their largest decline in seven years in the first quarter as consumers felt the pinch from accelerating inflation. The volume of goods sold in stores and online fell 1.4 percent from the previous three months, the most since early 2010, the Office for National Statistics said on Friday. In March alone, sales dropped 1.8 percent, far exceeding the 0.5 percent decline forecast by economists. The figures bode ill for an economy that relies heavily on consumer spending. Growth almost certainly cooled in the first quarter and is expected to slow further this year, putting pressure on the Bank of England to keep interest rates at a record low. Retail sales last declined during a quarter in 2013.