Daily Insight

Sterling weakened against the majors yesterday as UK inflation unexpectedly slowed to its weakest pace in more than a year as Consumer Prices rose 0.2% in March, putting the annual rate at 1.8% against the government's target of 2%. As a result, Sterling traded down against the Dollar and the Euro as speculation increased that the Bank of England will need to cut interest rates in order to keep inflation on target in the coming months.

In recent weeks, the Dollar has received a boost from a seemingly improving labour market as initial jobless claims in the U.S fell by more than 10,000 last week to 303,000 from 313,000 a week earlier, signalling the lowest unemployment rate since 2001. The Philly Fed Index, which focuses on manufacturing in the Philadelphia region, rose by more than anticipated in April to 13.2 from 12.3 the previous month as a growing overseas market, particularly in Asia and Europe, increased demand. In addition, an index of U.S. Leading indicators unexpectedly fell for a second month in March, declining 0.1% from February, which was the first two-month drop in over 5 years and provides yet further evidence that economic growth will slow in pace into the second quarter.

With regards the Euro, French Consumer Spending declined for the first time since the turn of the year in March, dropping 0.6% and there is also some important data released in the Euro-zone this morning as February's Trade Balance figures are expected to widen from €10.8 Billion.
Data Released 21st April

EU 10:00 Trade Balance (Feb)

written by Adam Solomon