Morning Report 31.03.2015 - A day with very little movement precedes Eurozone CPI y/y
Nicholas Ebisch, FX Analyst
Today will be a chance to see if the Eurozone’s QE programme and
near-zero interest rates are having any effect on inflation just yet.
Eurozone CPI y/y is forecast to come in at -0.3%, but encouraging German
data from last week have provided optimism during a time over economic
recovery in Europe. Other data on the day includes Canadian GDP m/m and
US consumer confidence figures. We may begin to see some market
volatility today as there is a good deal of US data later on in the
week.
GBP/EUR: Currently trading at 1.3713
Sterling gained around 0.25% on the single currency yesterday. Small
moves were to be expected with little data of note being released
yesterday.
Attention now turns to EUR CPI Flash Estimate that is being released at
09:00. If this data comes out better than expected, EUR gains on
Sterling throughout the day could be seen. This will signify a pickup in
economic activity in the Eurozone and indicate that the QE programme is
achieving its main objective of combating the deflationary threat. Also
with the GBP Current Account being released at 08:30, which has seen
larger deficits than forecast for the last year, EUR gains on Sterling
could be reinforced today if this trend continues.
GBP/USD: Currently trading at 1.4765
Cable has been slowly but surely declining as the dollar still has the
upper hand on sterling at the moment. The mid-1.47 range seems to be a
comfortable trading range now that this currency pairing is holding
steady below the 1.5 psychological barrier. Provided there is positive
US data today and the rest of this week, we may see a run for the
mid-1.40’s. Current account balance for the UK comes out this morning,
and US consumer confidence figures are out this afternoon.
EUR/USD: Currently trading at 1.0740
Yesterday saw a fairly range bound day of trading for the pairing, but
the dollar saw some strength in the afternoon on the back of strong US
pending home sale figures. Weakness has greeted the euro this morning on
what is a data-heavy day, with disappointing French consumer spending
figures and higher German unemployment readings.
Later this morning sees both Euro-zone CPI flash estimate figures and
unemployment rate data released, and although both are forecast to
remain the same at -0.3% and 11.2% respectively, we could see a lot of
market movement should one of the readings fall out of expectations.
From the other side of the Atlantic at lunchtime Fed members Lacker and
Lockhart will be speaking about US monetary policy and possibly
providing hints of when the US rate hike will take place, potentially
bringing volatility to the pairing. The day is wrapped up later this
afternoon with the important CB consumer confidence survey; with the
reading expected to improve, we could see the greenback strengthen
against the euro.
GBP/AUD: Currently trading at 1.9420
The pounds accent was boosted yesterday as UK net lending to individuals
rose 2.5bn in February, in line with forecast and up from January’s
2.4Bn. US consumer spending failed to aid the Aussie as it rose less
than forecast for the month of February. Sterling was able to
capitalise, finding almost 2 cent throughout the day.
Although we expect UK data today to have a fairly muted effect on the
pairing, another increase in the current account deficit could halt the
sterling gains.
GBP/NZD: Currently trading at 1.9759
Sterling gained around 0.1% on NZD yesterday. With very little data
released yesterday the general trend of Sterling gains against NZD
continued from the back end of last week.
The next piece of data being released of note for NZD is the GDT Price
Index tomorrow night. As a leading indicator of the nation’s trade
balance, if this release is better than forecast expect some NZD gains
against Sterling as a result.
GBP/CAD: Currently trading at 1.8803
Yesterday was another good day for Sterling, closing higher at the
1.8810 mark. A strong Canadian RMPI figure was unable to shift momentum.
This morning brings UK Current Account data which has failed to live up
to expectation this year, with the deficit continuing to grow.
Forecasters are predicting this will shrink, which could give Sterling
more lift. Canadian GDP data is released this afternoon which will put
pressure on the Loonie if it drops as expected.
This blog is prepared by Caxton FX Ltd for information purposes only
and may contain personal views that are not the opinion of the company.
This is not an offer to purchase or sell any security or an investment
advertisement. Caxton FX Ltd is authorised and regulated by the
Financial Conduct Authority, although foreign exchange transactions with
Caxton FX are regulated by HM Revenue and Customs. This email does not
constitute advice for any foreign exchange transaction, nor is it
intended as a solicitation for funds or recommendation to trade.
Subscribe to our morning, weekly or monthly reports here and make sure
you never miss an update:
https://www.caxtonfx.com/currency-banking/the-caxton-account#Free-currency-reports
