Markets quiet EUR + USD edge up. Market awaits UK GDP release

Tom Tong29/Apr/2014Currency Updates

Presently the markets are quiet. The Asian session was up to very little, with major currencies scuttling between tight ranges; liquidity is reduced, with Japanese markets closed for the public holiday. UK GDP is set for release at 9.30 GMT and will be the key play for the day ahead. The Ukraine crisis continues with Obama announcing fresh sanctions against Russia today.

GBP

Another good day for sterling yesterday. The pound continues to hold strong support across the board and London opens with cable hovering around 4.5 year highs. Leverage was also taken yesterday from chatter in the market over fresh M+A inflows. Pfizer confirmed it has made a bid to approach AstraZeneca which would be a monster deal for the pharmacology sector; it would also easily be the largest foreign takeover of a UK company.

Bundles of macro data are set for release this week, most important will be UK GDP, Eurozone inflation and NFP, implied volatility is expected following all of these figures, so we will likely see pivots across the market. The latest set of GDP figures are called at around 3%, slightly above 3% will mean the economy has finally regained the levels seen prior to the recession. The strong labour market data and carousel of positive figures across the board would suggest this is entirely possible.

UK GDP and the result of the services index survey come out at 9.30 GMT.

EUR

London closed with the euro scalping gains against the dollar, however trading against sterling was pretty flat. Fortnightly highs against the dollar were reached in the morning session. Euro strength stemmed from higher money market rates and expected inflation in the Eurozone will pick up and ease pressure on the ECB to loosen monetary policy.

Presently the market is primed for Eurozone inflation for April, due for release on Wednesday. Inflation is forecast to rise to 0.8% from 0.5%. If inflation comes in line with expectations, further euro strength is likely. Noises from the ECB yesterday attested to this with policymakers stating that euro strength was a strong deflationary factor and low inflation is likely to persist.

Data heavy day for the euro today with economic + services sentiment, also consumer confidence and industrial confidence surveys set for release.

USD

London closed with the dollar dipping against both sterling and the euro. Surprisingly strong data for the housing and manufacturing sector failed to affect the currency.

US home sales rose for the first time in 9 months over March, perhaps a sign that the housing market could be stabilising after interest rates rises and terrible weather have made the sector increasingly choppy. The pending home sales figure increased by 3.4% to 97.4 which was a fair jump with a 1% increase expected.

The results of the FED manufacturing survey were also positive and beat expectations. Market focus for the dollar will centre on Fridays NFP with the street expecting a big number. The recent huge swings in NFP have been largely blamed on the weather and data from other sections of the economy suggest this is true.

Data of note today includes Redbook index and consumer confidence figures.

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Written by Tom Tong

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