Sterling
The Pound struggled to pick up the pace against most of the majors yesterday as data showed that UK productivity fell at the fastest rate since 2008 during the fourth quarter of 2015.
The Office for National Statistics’ report detailed how output per hour shrank -1.2% at the end of last year, which corroborates the dovish outlook held by officials at the Bank of England. The downbeat productivity numbers further cement the view that UK interest rates will not rise for a considerable amount of time. The EU vote is the next significant hurdle and, even if British economic sentiment makes the jump, the prospect of higher rates appears unlikely with labour market performance lagging job creation.
Euro
Sterling clawed back some of its recent losses versus the Euro yesterday as markets reacted to the minutes report from the European Central Bank’s latest policy meeting.
The minutes showed that there was a broad consensus among policymakers to increase stimulus but that some members were concerned about the impact of bolstering the asset purchasing scheme. Despite these anxieties, senior ECB officials confirmed yesterday that the central bank would pursue further easing measures if inflation does not begin to pick up in the medium term.
Analysts expect the ECB to remain in wait-and-see mode for the time being but the single currency is likely to be susceptible to selling sprees if Eurozone consumer prices remain in the red.
US Dollar
The UK’s productivity puzzle, which continues to perplex British policymakers and is showing no signs of abating, helped push the Pound lower against the US Dollar yesterday.
‘Cable’ depreciated by around half a cent on the news of weaker output per hour from UK workers and there is potential for further GBP/USD losses this morning if manufacturing production data shows, as expected, that activity shrank -0.2% in February.
Across the pond in the US, a new labour market report showed that jobless claims tumbled -9,000 last week to 267,000. The encouraging figure marks 57 weeks on the trot since the claims index came in above the 300,000 mark. Although the current run is the longest since 1973 Federal Reserve officials retain a cautious outlook and Wednesday’s minutes report suggests that rates will only rise 50 basis points this year – most likely toward the tail-end of the year.
Canadian Dollar
The gloopy black substance that often reins supreme over the Canadian Dollar slid lower yesterday and, subsequently, so did the ‘Loonie’.
Crude oil prices weakened as optimism surrounding an output freeze deal waned and this helped the embattled Sterling register a one-cent rebound against the Canadian Dollar yesterday afternoon.
Later today Canadian data is anticipated to show that unemployment remained at 7.3% last month. Anything higher could hurt the ‘Loonie’, anything lower could give the North American currency a boost.
Australian Dollar
The Pound to Australian Dollar exchange rate surged higher by around two cents yesterday as disappointing Australian construction figures weighed on the ‘Aussie’.
The latest AiG performance of construction index plunged from 46.1 to 45.2 – well below the 50.0 mark that separates growth from contraction – in March and the downbeat report damaged demand for the Antipodean currency.
The risk-sensitive ‘Aussie’ also suffered as the US Dollar strengthened in relation to dips in global risk sentiment.
New Zealand Dollar
A downgrading of investors’ appetite for risk helped the Pound to a sturdy one-cent appreciation against the New Zealand Dollar yesterday.
Data Released
09:30 GBP Manufacturing Production (YoY) (FEB) -0.7%
13:30 CAD Unemployment Rate (MAR) 7.3%