Previous Day's Market Highlights
The dollar maintained a bid tone yesterday, in part as US 10-year yields edged towards four-year highs near 3% and as market sentiment was more optimistic over developments with North Korea and trade relations with China. Euro-dollar pushed lower, breaking below 1.22 overnight to hit its lowest levels since the start of March. Sterling-dollar fell below 1.40 to its lowest levels in a month as the dollar strengthened and as the pound came under pressure on potential divisions in the Conservative Party after the government’s defeat by the House of Lords on the EU Withdrawal Bill. The pound held 1.14 against the euro and made gains against the weaker commodity currencies.
While the calendar consisted primarily of mid-level data, the afternoon’s US releases were largely positive as Markit’s Services and Manufacturing PMIs surprised to the upside, alongside Existing Home Sales, which rose to an annualised 5.60M in March from 5.54M in February. This contributed to the greenback’s gains but had limited knee-jerk impact. Similarly, Eurozone PMIs were more positive than forecast but had little impact on the euro.
As for the day’s central bank speeches, ECB Member Cœuré did not address monetary policy ahead of Thursday’s policy decision. BoC Governor Poloz remained cautious on interest rate hikes. RBA Assistant Governor Kent was cautious on rate hikes but said the next move would likely be up, in a Q&A following his speech. A softer headline CPI print had little lasting directional impact on the Aussie against the pound last night.
|Currency Pairing||08:00 Today||Vs 08:00 Yesterday||Four-Week High||Four-Week Low||% Change|
Today's Market Highlights
Today is another mid-level data day ahead of the more exciting end of the week. The UK releases March Public Sector Net Borrowing (09:30 BST), and the US has more housing data out this afternoon, including the Housing Price Index and New Home Sales (14:00, 15:00). A limited calendar may keep the rates around current levels, with markets eyeing any additional dollar strength.
Looking ahead, on Thursday the ECB is expected to keep policy on hold. Investors will be watching closely for any guidance that the ECB could wind down QE in September, when its current programme of monthly asset purchases of €30B is expected to run out. Any such signalling or an upbeat outlook could strengthen the euro. However, given that inflation is only 1.3% and other data have softened, Draghi may remain more cautious this month, which could disappoint some investors’ expectations and weaken the euro.
On Friday, preliminary Q1 GDP figures pose a risk to both the pound and the dollar.
Today's Economic Calendar
|09:30||GBP||Public Sector Net Borrowing (Mar)||£0.900B||£-0.272B|
|14:00||USD||S&P/Case-Shiller Home Price Indices YoY (Feb)||6.3%||6.4%|
|14:00||USD||Housing Price Index MoM (Feb)||0.5%||0.8%|
|15:00||USD||New Home Sales MoM (Mar)||0.630M||0.618M|