Eurozone CPI Key for ECB

The euro is in focus today with the release of March CPI figures ahead of the ECB meeting later this month.

Previous Day's Market Highlights

A softer euro and dollar gains saw euro-dollar fall below 1.23 to its lowest levels since 21 March. Sterling-dollar held within the 1.40-1.41 range, while the weaker euro pushed sterling back above 1.1450 to its highest levels in over a week. Besides a spike above 1.15 following the Bank of England meeting, this marks some of the rate’s highest levels since late January.
 
The day’s macroeconomic data had limited market impact. UK Manufacturing PMI ticked up 0.1 points, slightly strengthening the pound. The Global Dairy Trade Price Index declined at a slower pace than at the previous auction. Earlier in the day, the Reserve Bank of Australia kept interest rates on hold, as expected.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1468 1.1538 1.1150 3.36%
GBP/USD 1.4067 1.4245 1.3781 3.26%
EUR/USD 1.2266 1.2477 1.2239 1.91%
GBP/AUD 1.8285 1.8509 1.7599 4.92%
GBP/NZD 1.9308 1.9644 1.8925 3.66%
GBP/CAD 1.7994 1.8417 1.7726 3.75%

Today's Market Highlights

UK Construction PMI typically has the least impact on sterling of the UK’s three PMI releases and may therefore see limited movement today. Attention this morning will mainly be on the preliminary estimate of March CPI in the Eurozone (10:00 BST). Headline inflation is forecast to have accelerated to 1.4% from 1.1% in February, with core inflation projected to have ticked up from 1.0% to 1.1%.
 
Inflation gains could strengthen the euro this morning as investors look for signals that will support the ECB’s winding down of QE and, eventually, raising interest rates. Monthly asset purchases are currently set to continue until September, and the ECB will announce its latest policy decisions on 26 April.
 
In the afternoon, US data will be in focus. ADP Employment Change is forecast to hold above 200K if fall back from February’s figures, while the ISM Non-Manufacturing PMI is forecast to slow but hold well above the 50-mark consistent with industry expansion. Bullard and Mester are amongst the days’ Fed speakers, with Bullard likely to discuss the economy and Mester to speak on diversity in economics.
 
Overnight, a wider Australian trade deficit could weigh on the Australian dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Markit Construction PMI (Mar) 50.8 51.4
10:00 EUR Unemployment Rate (Feb) 8.5% 8.6%
10:00 EUR Prelim CPI YoY (Mar) 1.4% 1.1%
10:00 EUR Prelim Core CPI YoY (Mar) 1.1% 1.0%
13:15 USD ADP Employment Change (Mar) 208K 235K
14:45 USD Fed's Bullard Speaks
14:45 USD Markit Services PMI (Mar) 54.3 54.1
15:00 USD ISM Non-Manufacturing PMI (Mar) 59.0 59.5
15:00 USD Factory Orders MoM (Feb) 1.7% -1.4%
15:30 USD EIA Crude Oil Inventories (30 Mar) 1.667M 1.643M
16:00 USD Fed's Mester Speaks
01:30 AUD Trade Balance (Feb) -247M 1,055M

Caxton