Morning Report: 26 April 2017

26th April 2017 By: Ranko Berich

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GBP. Sterling gained vs USD yesterday, but G10 FX volatility was subdued overnight, as the euro rally that began on Monday appeared to finally hit a spot of resistance yesterday evening. FX markets remain in something of a “wait and see” mode, ahead of Thursday and Friday’s crucial top tier data releases, and no headline sterling data will be released today, while General Election campaigning continues.

EUR. The euro did appreciate further yesterday, but the gains came in the morning and afternoon, with the single currency hitting some resistance in the afternoon and trading sideways since then. All recently released opinion polls on the second round of the French presidential election show centrist Macron ahead of rival Le Pen by around 20 percentage points, meaning there is no sign yet that political risk is likely to regain importance as a driver for the euro. Tomorrow’s European Central Bank meeting remains the week’s major euro event, and no data will be released today.

USD. USD sold off against EUR and GBP yesterday, but had a quiet overnight session. A fall in CB Consumer Confidence was one of the catalysts for yesterday’s sell off, as the index tracking survey responses fell to 120.3 from 124.9 previous. Also out were House Price Indices from Case Shiller and the FHFA, both of which exceeded expectations, as did New Home Sales. No headline US data will be released today.

CAD. The loonie weakened to yet another fresh low yesterday, as Donald Trump made further comments about trade disputes with Canada, after announcing a lumber tariff earlier in the week. Improving oil prices gave CAD a reprieve later in the trading session. Today at 13:30 BST monthly Retail Sales data will be released, followed at 15:30 by US Crude Oil Inventories.

UK news

Reuters: UK public inflation expectations stable in April – Citi-YouGov. The British public’s expectations for inflation over the coming year remained steady in April, despite previous sharp rises in the country’s most closely watched measures of price growth, a monthly survey by bank Citi and polling firm YouGov showed. Expectations for inflation in a year’s time held at 2.5 percent in April, unchanged from March. Britain’s consumer price inflation – targeted by the Bank of England – held at 2.3 percent in the year to March, unchanged from February but still at levels last seen in 2013, while retail price inflation, used in many commercial contracts, dipped to 3.1 percent.