Headlines
UK mortgage approvals up
– Consumer confidence at 12-yr high.
GBP/EUR flat
– Eurozone economic sentiment hits 44-month high.
Pound declines half cent against US Dollar
– Fed’s Yellen talks of raising rates.
‘Loonie’ down on BOC comments
– Negative GDP predicted for Jan.
Sterling
Sterling performed adequately yesterday in response to a couple of upbeat economic releases. Data from the Bank of England showed that mortgage approvals accelerated from 60,700 to 61,800 in February, which helped stoke rate hike bets as investors speculated over the possibility that an overheating of the UK housing market could prompt policymakers to tighten ahead of schedule.
During the evening it was announced that British consumer confidence ticked to a 12-year high of … wait for it… +4(!) in March. The GfK survey showed that the recent onset of rising real wages – though largely driven by plunging global oil prices – was helping to increase economic sentiment in the United Kingdom. Indeed, a separate report from polling company Yougov showed that for the first time since records began six years ago, the majority of British citizens expect their financial situation to improve over the next 12 months.
Euro
Although the Pound to Euro exchange rate did fluctuate yesterday, the pair ultimately ended up at around the same level at which it began. Upbeat British consumer confidence and housing market data was equalled out by a rise in German inflation from 0.1% to 0.3% and a 44-month high Eurozone economic sentiment index score.
As testament to how dire the economic situation in Europe has been over the past few years, investors were cheered by a rise in sentiment from -6.7 all the way to -3.7. The ’surge’ in confidence was attributed to the European Central Bank’s liquidity boosting quantitative easing scheme, the more competitive Euro exchange rate and the recent slide in fuel costs.
Over in Greece government officials argued with the nation’s other political parties over how best to run the country. Bearing in mind that little-to-no progress was made, these talks were essentially very similar to those PM Alexis Tsipras has been having with other Eurozone leaders, almost non-stop, since he was sworn into power on January 26.
US Dollar
Sterling dipped by around half a cent against the US Dollar yesterday as traders reacted vociferously to a set of, quite frankly, bland comments from Federal Reserve Chair Janet Yellen.
The Fed Governor said she expects ‘that conditions may warrant an increase in the federal funds rate target sometime this year’, which although positive was already largely priced into the market and therefore didn’t appear to bring anything new to the table. Indeed, the real debate is whether the Fed will hike rates in June, July or September of this year.
Canadian Dollar
The Pound surged higher by around a cent against the Canadian Dollar yesterday afternoon in response to news that Bank of Canada Governor Stephen Poloz had described the recent sharp drop in crude oil prices as ‘atrocious’ for the Canadian economy, which stoked the doves to bet on further rate cuts from the BOC.
The latest dip in value of ‘black gold’ had a reciprocally negative impact on the ‘Loonie’ yesterday and demand for the Canadian currency could decline further this afternoon if gross domestic product prints at -0.2% for the month of January, as markets forecast it to.
Australian Dollar
Sterling rallied by around a cent against the Australian Dollar to strike a 10-day high against the Antipodean currency yesterday as speculative investors began to doubt the Australian economy’s ability to avoid recession over the next few years.
It is generally accepted that the hard landing that Australian exporters are facing following the once-in-a-decade mining boom has the potential to seriously weaken the Australian economy over the next few years. And as analysts begin to turn up talk of an impending recession, the ‘Aussie’ is likely to depreciate further against the majors.
New Zealand Dollar
GBP/NZD remained relatively flat yesterday as dampened demand for the ‘Aussie’ boosted the appeal of the New Zealand Dollar to currency traders looking for high yield with relatively little financial risk.
Data Released Today
08:55 EUR German Unemployment Rate s.a. (MAR)
09:30 GBP Gross Domestic Product (YoY) (4Q F)
10:00 EUR Euro-Zone Unemployment Rate (FEB)
10:00 EUR Euro-Zone Consumer Price Index Estimate (YoY) (MAR)
13:30 CAD Gross Domestic Product (MoM) (JAN)
13:30 CAD Gross Domestic Product (YoY) (JAN)
15:00 USD Consumer Confidence (MAR)