Morning Report 01.04.2015
April 1st brings Manufacturing PMI from the UK, and Employment change and Manufacturing PMI from the states.
Nicholas Ebisch, FX Analyst
UK data was mixed yesterday as the current account came in worse than expected from the UK, but Final GDP q/q came in positively. Eurozone CPI y/y was not as poor as expected, coming in at -0.1%, when expectations were for -0.3% y/y. This is positive news for the euro, as it is an encouraging sign that inflation may be picking up as a result of the implementation of near-zero interest rates and quantitative easing. The pound gained against the euro during yesterday’s session, and a positive PMI figure today could see that trend repeat itself.
GBP/EUR: Currently trading at 1.3800
· Yesterday saw Sterling gain around 0.8% on the single currency over the course of the session. This was on the back of slightly better than forecast GDP data for the UK, an increase of 0.6%, along with a fall in the size of the Current Account deficit for the UK economy.
· Attention now turns to Manufacturing PMI for the UK. With this being the only real piece of data of note that is being released for this pairing today, a better than forecast figure could see Sterling gains continue.
GBP/USD: Currently trading at 1.4835
· US consumer confidence came in positively yesterday, and helped to bolster the dollar during the US afternoon session. Today’s Manufacturing PMI data from the UK is due to come in positively at 54.5 (up from 54.1 last month).
· The pound is scrambling to find a solid reason to resist the advance of the USD, but if US data this week comes in positively, we may see this rate continue on a downward trajectory. The afternoon will bring the ISM Manufacturing PMI and ADP Non-Farm Employment Change data from the US.
EUR/USD: Currently trading at 1.0750
· Yesterday saw a fairly range bound day of trading for the pairing, despite the US CPI flash estimate figure and the consumer confidence survey both beating expectations. This morning’s positive Spanish manufacturing PMI figure has failed to lend the euro a helping hand, as we enter a data-heavy day from the US.
· Lunchtime’s ADP Non-Farms employment data out of the US is forecast to improve, so we could see some dollar strength in the early part of the afternoon. We may then see some dollar weakness later on in the afternoon however, if the ISM Manufacturing PMI figure disappoints, as it is predicted to. Furthermore two US Fed members will be speaking today, which has the potential to bring some volatility to the pairing.
GBP/AUD: Currently trading at 1.9460
· Yesterday saw the Australian dollar continue to weaken against sterling, as the pairing has risen from 1.9 only a few days ago, to its current level of 1.945. This can largely be attributed to sterling’s sound performance over the last days, and the underperformance of the Australian dollar as commodity prices continued to decline.
· However, positive Chinese data and recent reports which have shown support for oil prices seem to have stopped this rate from advancing much further. Australian trade balance data is due to be released overnight, but at the moment, GBP/AUD is trading near a 3-week high.
GBP/NZD: Currently trading at 1.9890
· The psychologically important 2.00 level is now back in sight for the first time in almost a fortnight as the pound looks to take some gains out of the kiwi dollar before the Easter weekend.
· In order for the pound to breach the 2.00 level before the Easter weekend we will need to see a good run of positive UK PMI data which kicks off with this morning’s Manufacturing PMI figure (released 09:30). The Global Dairy Trade Price Index released tonight in New Zealand will also be an important figure to watch. With milk being one of New Zealand’s biggest exports this figure has influence over the price of the kiwi dollar.
GBP/CAD: Currently trading at 1.8820
· Yesterday’s activity was fairly muted, with a small spike in sterling favour before midday. UK Current Account data failed to impress and Canadian GDP edged down 0.1 per cent in January.
· The focus for today will be on UK manufacturing data in the morning, which forecasters predict will continue to show signs of growth. This news will set the tone before US data is released this afternoon. A strong US posting could give the Loonie a helping hand.
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