Morning Report: 4 April 2017

4th April 2017 By: Ranko Berich

To read this report in Spanish, click here. Para leer este reporte en Español, por favor presione aquí.

To contact us, please email or phone +44 20 3650 6320.

GBP. Yesterday was a rather slow day for major currencies including sterling, as most of the G10 currencies closed within half a percentage point or less of open. The pound did drop slightly throughout the day against USD, and has opened this morning similarly on the back foot. Yesterday’s major data event was the Markit’s Manufacturing Purchasing Managers’ Index, which fell short of expectations to contract to 54.2. Although a level above 50 still indicates the surveyed businesses are reporting output growth, the release nonetheless suggests a slowdown in the previously very optimistic series. Today at 09:30 BST the equivalent Construction PMI will be released.

EUR. EURUSD price action was similarly lacklustre yesterday, and the euro managed to drift only slightly higher than sterling. Manufacturing Purchasing Managers Indices for various eurozone countries showed the sector expanding at a fairly healthy rate across the euro zone, although Spain’s index fell. The eurozone’s Unemployment Rate also ticked down to 9.5%, although youth unemployment remained worryingly high. Producer Prices changed 0.0% in February, after January’s sharp 1.1% jump. Today at 08:00 Spanish Unemployment data will be released, followed at 10:00 by Retail Sales.

USD. Weak Auto sales were the main feature of yesterday’s US data, which saw treasury yields drop to a 5 week low in the United States and mixed trading in USD versus G10 currencies, with few notable moves. Ford, General Motors, Fiat Chrysler and many other automakers reported a dip in vehicle sales in March, normally one of the bigger months of the year for sales. Manufacturing Surveys from Markit and ISM both showed a solid level of reported output growth, with both Purchasing Managers Indices remaining comfortably above 50. The Fed’s Harker re-iterated the consensus view of senior Federal Reserve policy makers that around two more rate hikes would be appropriate this year. Today at 13:30 BST Trade Balance data will be released, followed at 15:00 by Factor Orders, and at 21:30 by a speech from the Fed’s Tarullo.

CAD. The loonie weakened slightly yesterday, despite a solid Business Outlook Survey from the Bank of Canada. Markit’s Manufacturing Purchasing Managers’ Index also showed an improvement in sentiment among the surveyed businesses. The BoC’s latest Business Outlook Survey concluded that there were early signs of a “modest” pick up in business investment, after a period of weakness following 2014’s sharp declines in crude oil prices. Today at 13:30 BST Canada’s Trade Balance will be released.

UK news

Reuters: UK grocery inflation jumps 2.3 percent in 12 weeks to March 26. British grocery inflation jumped by 2.3 percent in the 12 weeks to March 26, with the price of staples including butter, fish, tea and skincare all rising, industry data showed on Tuesday. Market researcher Kantar Worldpanel said the rise of 2.3 percent compared with a 1.4 percent increase recorded in the previous 12 weeks to Feb. 26 period. Kantar data also showed most of the big supermarkets struggling in the period, as Easter falls later this year and outside of 12-week time frame.

Reuters: UK manufacturing surge slows in March – PMI. British manufacturing lost some of its momentum last month, as export orders grew more slowly and demand for consumer goods faltered against a backdrop of rising inflation pressures, a survey showed on Monday. Sterling’s tumble following June’s vote to leave the European Union helped manufacturers enjoy their fastest annual growth in three years during the final quarter of 2016. This capped a year when Britain’s economy grew 1.8 percent, the second-fastest rate among the world’s main advanced economies. But financial data company Markit said its purchasing managers’ index (PMI) for the sector suggested manufacturing growth slowed in the first three months of this year. March’s manufacturing PMI slipped to 54.2 from a downwardly revised 54.5 in February, undershooting economists’ average forecast of 54.6 in a Reuters poll.