Could positive data make this a good week for sterling?
Sterling clawed back some further ground on Friday, moving to a fresh one-month high against the US dollar and recovering much of the losses it had made against the euro throughout the week.
A relatively quiet week for sterling lies ahead, with no major data set for release until consumer inflation figures tomorrow. After slipping into negative territory earlier in the year, inflation is expected to push to a one-year high of 0.4%. Although this is still well short of the 2% target set by the Bank of England (BoE), it does show that progress is being made on this front. The only other major data release this week is retail sales on Thursday. Last month saw the highest monthly increase since January 2014 in retail sales, and another strong reading would provide sterling with support. A bank holiday on Friday will likely result in reduce liquidity in sterling markets, dampening potential movements.
Can the euro continue its ascendancy?
The euro had a quieter day on Friday, as it moved down against both sterling and the US dollar. Producer price index for Germany came out slightly worse than expected at -0.5%, compared to the forecast figure of -0.2%, but this was a slight improvement on last month’s figure of -0.7%, but overall the data disappointed investors. Other than this it was a slow day for the euro after a reasonable week – and the single currency begins this week on a positive note.
This week, the initial focus for investors will be German IFO business sentiment data, released today; this is expected to remain at the same level as last month at 105.7. This will be followed by ZEW business sentiment, which is forecast to fall slightly from 52.3 down to 52; but any figure above 50 is a positive one. On Thursday we have the Purchasing Manager Indices (PMI) for Germany, France and the Eurozone. Expectations are for the manufacturing indices to be under pressure and for service PMI’s to be steady given the amount of money the European Central Bank is pumping into the Eurozone economy.
Slow news for the US dollar expected to continue until later in the week
It was a quiet day on Friday for US dollar data, with Consumer sentiment the only release of note – and one that showed a drop in confidence, reaching fresh lows that had not been seen for six months. Various members from the US Federal Reserve also spoke, but with nothing of particular note mentioned.
We are in for a quiet start to this week with minimal data releases for the US. Tuesday will see the release of Flash Manufacturing Purchase Managers’ Indices (PMI) which is expected to increase, followed by the release of both Durable Goods Orders and Weekly Labour Data on Thursday. Investors will be keeping a keen eye on Friday however, with the Final Gross Domestic Product (GDP) figure for last quarter 2015 announced. With recent worries regarding the world economy and the continued pressure on the Oil price, it will be interesting to see if the US manage to post a non-revised figure.
Quiet week expected for Antipodean countries
This week is a rather quiet one on the data front. Australia’s House Pricing Index is released early Tuesday, and following this Reserve Bank of Australia Governor Stevens, will speak on Tuesday about the Global finance sector. Wednesday sees the release of New Zealand’s Trade balance; February’s figures were the first to show a surplus in exports in six months, so investors will be hoping that the same follows this month.
Weekly update by Carl Hasty, director of Smart Currency Business
