Eurozone consumer confidence surges to strongest in eight years
24/Mar/2015 • Currency Updates•
A dip in sentiment towards the Dollar caused Sterling to climb against the Greenback on Monday, ending the London session 0.3% higher despite disappointing news from the Confederation of British Industry.
The monthly CBI industrial trends survey showed UK export orders fell last month to its lowest level in more than two years, causing the index for total orders to fall to zero from +10 in January. Only 10% of manufacturers in the UK said their export orders were above normal, compared to 35% who experienced below average. This is unsurprising given subdued Eurozone demand and headwinds from a stronger Pound, which are likely to force British exports even lower in the coming months. On a positive note, the survey suggests that domestic demand remains resilient, with overall factory performance better than the 20 year average.
The Office for National Statistics is set for a number of releases in the UK this morning. Inflation data is expected to show price growth barely rose in February.
The Euro continued to rebound strongly against its peers as markets opened for the week, climbing by 1.2%. This mini stabilisation has now seen the single currency appreciate by over 4% against the Dollar in a little over a week.
More evidence of an uptick in the Eurozone economy was released on Monday afternoon. Consumer confidence, while remaining negative, soared its way to close to an eight year high, comfortably beating expectations of -6 to register -3.7 in March. This was significantly more impressive than the -6.7 recorded last month and points to solid support to GDP growth in the next few months.
President of the ECB Mario Draghi spoke at the quarterly hearing before the Committee of Economic and Monetary Affairs in Brussels yesterday afternoon. This was, as expected, mostly a non-event, with Draghi offering little new information and repeating much of what we already knew. His shift towards a more-upbeat assessment of the economy continued to stand out. He reiterated the recent growth in momentum of the economy while confirming quantitative easing remains on track after a smooth implementation, with market liquidity remaining ample.
A number of PMI’s from Markit are more than likely to cause moderate volatility in the Euro this morning. Manufacturing and services growth data for France, Germany and the wider Euro-area are all set for release between 8-9am London time.
A strong day for the Euro caused the US Dollar to fall against its peers in trade weighted terms, with the US Dollar index 0.85% lower for the day.
A number of economic indicators released yesterday put downward pressure on the Dollar by surprising on the downside. Sales of previously owned homes in February printed lower than anticipated, despite rising in February. The National Association of Realtors measure increased by 1.2% to a seasonally adjusted 4.88 million, although down on the 1.8% forecast. This, however, still remains admirable considering the especially poor weather across much of the country in the last month. Elsewhere, the Chicago Fed national activity index, a monthly gauge of overall economic activity, dipped back into negative to -0.11, indicating growth below the historic trend.
Tuesday looks set to be a busy day in the US. Inflation is expected to have remained in negative territory in February when announced by the US Bureau of Labor Statistics just after midday, while manufacturing growth is forecast to have slowed when released at 1:45pm GMT.
Rest of the world
A number of emerging market currencies posted large gains on Monday on continued speculation that the Federal Reserve would hike interest rates more gradually than expected. Brazil’s Real was the biggest mover of the day, gaining close to 2.5% against the Dollar.