US durable goods orders fall as strong Dollar hurts manufacturers
26/Mar/2015 • Currency Updates•
The Pound ended yesterday unchanged against Greenback after signs the UK housing market is slowly picking up.
Mortgage approvals in Britain rose for the second month in a row in February, hitting a five month high according to data released from the British Banker’s Association. The number of new mortgages approved surprised expectations by increasing 2.5% to 37,300, up on January’s 36,400. While encouraging, this is still considerably down on the six year high, of 49,209, recorded this time last year. Remortgages were also down on last month by 10%, and by 7% on a year previous. However, given the recent stamp duty reforms, low mortgage rates, and increasing consumer confidence, we are likely to see an uptick in housing activity during the remainder of the year, with house prices forecast to rise by around 5% in 2015.
Elsewhere, Bank of England MPC member Kristin Forbes warned inflation in the UK would be turning negative in the coming months, reiterating that the central bank could cut rates if inflation continued to remain persistently low.
The Office for National Statistics will be releasing retail sales data this morning at 9.30am.
An increase in business confidence in Germany caused the Euro to continue its rebound against the Dollar, with the single currency ending the London session 0.15% up on the Greenback.
Business confidence continues to tick upwards in Germany, with the monthly confidence indicators from IFO all climbing on last month. The business climate index rose from 106.8 last month to 107.9 in March, while the expectations and current assessment indicators climbed to 103.9 and 112.0 respectively. The data follows multiyear high consumer confidence in the Eurozone and provides further evidence of a moderate improvement in economic performance in the Euro-area. Such strong data suggests that the Eurozone is getting a timely boost on the back of the launch of the ECB’s quantitative easing programme. Elsewhere, the ECB agreed to raise the emergency liquidity offer to Greek banks to €71 billion on Wednesday, with Athens now due to provide plans of its programme of reforms by Monday at the very latest.
Today bodes to be a mostly quiet day in Europe with little in the way of economic indicator data. The change in money supply and private loans for February, released by the ECB, may cause some volatility this morning.
The Dollar dipped marginally against its peers again yesterday after a decrease in durable goods orders, with the US Dollar index falling by 0.05%.
Orders for durable goods in February unexpectedly dropped, with a strong Dollar and bad weather continuing to put increasing pressure on manufacturers in the US. The historically volatile monthly indicator released by the US Census Bureau unexpectedly declined by 1.4%, having expanded by 2% a month previous. While this is prone to revision, the broader trend suggests softening demand, with overall orders since the start of the year down by 0.5%. With the full impact from the oil slowdown still to come, demand is likely to remain sluggish in the coming months. Durable goods orders, excluding transportation, fell marginally by 0.4%. In other releases, mortgage applications rose by 9.5% last week, its highest increase since January.
There were dovish comments from Federal Reserve member Charles Evans, who yesterday claimed he saw “no compelling reason” to hurry an interest rate hike. He claimed he would need to see a rise in core inflation from its current 1.3% level.
Today we will see more data out from Markit in the US, with the release of the services and composite PMI data for March at 1:45pm GMT.