Morning Report: 3 April 2018

April 3, 2018

GBP After an uneventful day yesterday sterling is trading higher against USD this morning, ahead of this week’s calendar of survey releases. This morning’s data included Markit’s Manufacturing Purchasing Managers’ Index, which printed above expectations. Manufacturing PMIs have been slower in Q1 of this year than in Q4 2017, and March’s data, despite being better than expected, included reports of slower growth in new orders and employment. Later in the week, equivalent indices will be released for for Construction and Services on Wednesday and Thursday respectively.

USD The dollar weakened overnight against almost the entire G10 group of currencies, making only marginal progress against JPY. Yesterday’s data included a slightly weaker than expected reading for the ISM Manufacturing Purchasing Managers’ Index, which fell to 59.3, still a very high reading, from 60.8. Total Vehicle sales will be released throughout the day, and Federal Reserve Governor Lael Brainard will speak at 21:30 GMT.

EUR The euro has seen mixed performance since the end of last week, advancing against the Scandinavian currencies but losing to GBP and JPY. This morning’s data has included German Retail Sales, which fell 0.7% in February, defying expectations for a recovery from January’s slowdown. Survey data for a variety of European manufacturing sectors has been released by Markit, and showed a consistent rate of expansion across the region, while the latest Spanish labour market figures showed Unemployment at a fresh post-crisis low.

CAD The loonie sold off sharply yesterday afternoon, but quickly reversed its losses and is currently trading roughly flat compared to the end of last week. Canada’s Trade Balance will be released on Thursday, followed by labour market data on Friday.

UK news

  • Wall Street Journal: Technology Shares Plunge Again Amid Growing Backlash. Shares of the biggest names in the technology industry extended their three-week decline Monday, raising fears among investors that cracks could finally be appearing in what had been one of the most enduring trades of the past year.
  • Financial Times: Reserve Bank of Australia holds interest rates at 1.5%. The Reserve Bank of Australia held its cash rate target at 1.5 per cent at its April meeting, in line with economists’ predictions compiled by Reuters. The bank last cut rates in August 2016.
  • Financial Times: At face value, these numbers are poor’: German retail sales slide. This is becoming a habit: Consumers have provided yet another sign of a slowdown in the fizzing German economy. Retail sales fell by 0.7 per cent in February, from January, a big miss from the 0.6 per cent gain envisaged in a poll by Reuters. That left sales up by 1.3 per cent on the year, below the 2.2 per cent expected.

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