By Nick Harrison
GBP
The Pound maintained its strength at the beginning of this week and is still proving to be an attractive option for investors against other majors.
It’s been a quiet week for UK Data, although over Monday night we heard that Retail Sales in the UK fell by the least amount in 10 month. Encouraging ? Maybe.
The Deputy Governor of the Bank of England – David Ramsden – made a speech yesterday, concentrating on the BoE’s involvement in bond markets. This didn’t set the FX world alight though as the market continued to trade a tight range throughout the day. Catherine Mann from the MPC speaks later today, so any sentiment that arises from this speech could raise one or two investors ‘ eyebrows.
USD
The USD was down early week about 1.2% from it’s YTD peak on February 14th. It seems that the initial shock of the Fed moving its sentiment from cutting their interest rates to keeping them on hold has now eased and as a result the Dollar has gently allayed with US stocks now rising.
New Home Sales came in less than expected on Monday and a much worse than expected Durable Goods figure didn’t do much to bolster the Greenback yesterday. Also, the Consumer Confidence figure came in lower than expected yesterday afternoon.
No major movements so far, but the rest of the week sees some major data releases due. These in turn could well affect Sterling and the EUR.
1.30pm today see’s the Preliminary q/q GDP figure in the US. This is the broadest measure of economic activity and the primary gauge of the economy’s health. Dollar buyers or sellers could be affected by this figure as the market can react strongly to this data if it falls widely outside of it’s forecast – in this case 3.3%.
Thursday sees the Core PCE (Personal Consumption Expenditure) Price Index released at 1.30pm. This is an indication of inflation and is a measure of goods and services consumed by individuals. It doesn’t carry as much sway as the CPI figure released 10days before but, again, it could interest investors if it falls outside of it’s 0.4% forecast.
Also on Thursday, the US Unemployment Figure is released – another indicator of economic health and one which could sway the markets if the figure surprises investors.
Finally on Friday – we see US Consumer Sentiment and Manufacturing figures released at 3pm. Further food for thought and another possibility for market movement.
And…. as if all that wasn’t enough – we have a host of Federal Reserve members making speeches late in the day.
EUR
The European Central Bank President Christine Lagarde came out for a speech on Monday this week. She said the “retreat in inflation in the Eurozone will continue” .. but that she and her colleagues need to see more evidence that price growth is returning to their goal. So very non-committal and clearly aware that even the slightest offer of monetary policy indication has traditionally sent investors into a spin.
The indication is that the ECB will start cutting their rates a month before the US Federal Reserve do, as Eurozone price pressures have eased faster than the US.
German CPI could be a game changer as far as this week is concerned though and anything outside of the forecasted 0.5% could easily sway investor sentiment towards or away from the EUR. Germany has recently slashed it’s growth forecast, so this could potentially be a key piece of data this week.
The rest of this week could be a choppy ride then in the currency markets, so make sure you reach out to us to find out how the markets are reacting and how this is impacting your FX risk.
The data discussed, could directly impact the cost of your currency requirements, so we are here to help you make informed decisions about exchange rate levels.
Recap of major data releases for the rest of this week
TODAY
Preliminary US GDP q/q – Forecast 3.3%
THURSDAY
German preliminary CPI – Forecast 0.5%
US Core PCE – Forecast 0.4%
US Unemployment Claims – Forecast 209K
FRIDAY
ISM Manufacturing – Forecast 49.5
Consumer Sentiment – Forecast 79.6