Morning Report 01.05.2015
Nicholas Ebisch, FX Analyst
Yesterday saw positive Spanish data, and encouraging Eurozone CPI data which shows that the Eurozone may be recovering faster than was previously anticipated, with inflation staying steady at zero and not contracting. The euro gained against its major counterparts yesterday, and may have scope to continue today, as the Eurozone takes a bank holiday. Yesterday’s dollar depreciation was stymied by positive unemployment claims data in the afternoon. Today, we will see Manufacturing PMI from the UK and ISM manufacturing PMI from the states later in the afternoon.
GBP/EUR: Currently trading at 1.3657
The rate fell further yesterday, in light of some better-than-forecast euro data. Spain’s economy grew 0.9% in the first quarter, its fastest growth in seven years, and CPI data showed inflation holding instead of contracting for the first time this year.
With bank holidays in several countries, no euro data is expected today. This morning’s releases include UK Manufacturing PMI, forecast to increase 0.2 to 54.6, and m/m Net Lending to Individuals, also forecast to increase. We may see a slight strengthening of the pound as a result, but otherwise expect the euro to maintain its strength.
GBP/USD: Currently trading at 1.5347
Stronger-than-expected US data saw the greenback halting Sterling’s gain as cable weakened after several days of hitting month or two-month highs. US unemployment claims came in at a 15-year low at 262,000, and Employment Cost Index q/q also performed slightly better than forecast at 0.7%, indicating that wages are starting to pick up. Other US data were mixed, with both Core PCE Price Index m/m and Personal Spending m/m coming in slightly under forecasts.
Today sees the announcement of US and UK manufacturing PMI data, both forecast to increase slightly over last month’s results, as well as m/m UK Net Lending to Individuals. We may see the dollar continue to regain ground against the pound as markets continue to react to yesterday’s data, as well as today’s releases.
EUR/USD: Currently trading at 1.1254
Stronger-than-expected US data saw the greenback vying with a strong euro, resulting in some volatility in yesterday’s rate. US unemployment claims and employment cost data came in better than forecast, as did Spain’s q/q Flash GDP.
With no data out of the eurozone today, US data will be a primary motivator for the pairing, in addition to markets’ continued reactions to this week’s Fed statement and yesterday’s strong euro data. We may see the euro make further gains against the dollar.
GBP/AUD: Currently trading at 1.9422
The Australian dollar is still on the back foot, as we enter the first day of May. Market participants are holding their breath in anticipation of the Australian central bank meeting, which will happen during early morning hours of Tuesday May 5th. The Australian central bank has hinted that they could raise interest rates as soon as their upcoming meeting.
Australia did produce some good data overnight with positive PPI q/q data released early this morning, which strengthened the Aussie slightly. Traders will also look to AUD Building Approvals m/m data on Monday during the UK bank holiday, and trade balance very early Tuesday morning as the last major data points before the Australian central bank meeting.
GBP/NZD: Currently trading at 2.0249
With no data out of the UK or New Zealand yesterday, the markets continued to react to Wednesday’s RBNZ statement. While the kiwi strengthened nearly two cents against the pound throughout yesterday’s session, the rate seems to have self-corrected overnight, erasing those gains.
Today’s data releases include UK Manufacturing PMI (9:30), forecast to increase slightly to 54.6, indicating slightly improved economic health. In addition to this week’s RBNZ statement, UK data will be the primary mover for this pairing until next week’s release of New Zealand’s unemployment data and Global Dairy Trade Price Index. The rate may remain range-bound.
GBP/CAD: Currently trading at 1.8558
We witnessed more volatility yesterday with the loonie advancing momentarily before losing ground. Canadian GDP m/m remained unchanged in February from January.
The key driver for today is UK Manufacturing PMI data in the early session, which is being forecast to increase by 0.2 per cent. This could give the pound a helping hand and push it higher before the weekend. Weaker-than-expected data could do the opposite.
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