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Video for April 15th, 2008 (3 min 12 sec): Better Data Helps Dollar, Pound Falls on CPI & Housing, Loonie Up on Oil UK RICS House Price Balance Falls To Lowest Level on Record, BRC Retail Sales Negative In the UK, the portion of surveyors reporting falling house prices increased to a historical low of 78.5% in March. The news depressed the Pound as falling housing prices are expected to exacerbate the slowdown in the economy. In a separate report, retail sales were shown to have declined 1.6% in March compared to the same time last year. It was the first negative annual measure for the BRC Monitor in over 2 years. UK Consumer Infaltion Stays Steady, Surprises on Downside UK's annual consumer inflation remained at 2.5%, which was a 9-month high in February. This was still a lower than expected inflation rate and mitigates some worries over inflationary pressure that stemmed from yesterday's release of record high producer prices. The BoE will be shifting some of its focus from price stability to economic growth, so even with the current price pressures, the bank will not be deterred from a rate cut campaign. GBP/USD - Pound Sinks on Housing and Consumer Inflation Data
The Pound surged against the Dollar yesterday following its producer price data. That rally stalled and reversed near 1.99. The Pound continued to fall following today's fundamental news. By 1 PM EST, the pair set a new 6 week low near 1.9620. The swing from yesterday's peak to today's low amounted to a 270 pip change. GER/EUR ZEW Economic Sentiment Slides in April The Euro-zone's ZEW economic sentiment index soured in April. March's report showed some optimism, but proved to be an aberration as high inflation pressures consumers. The German index fell to -40.7 while the euro-zone index measured -44.8. US Empire Stabilizes, Results Better Than Expected In the US, the NY Fed "Empire" manufacturing index surprised forecasts on the upside. Manufacturing stabilized with the index showing a reading of 0.6. This compares to negative 22.2 in March. US Producer Prices Climb on Energy and Food After feeling a 0.3% price increase in February, producers paid 1.1% more in March, due to higher food and energy prices, . Core inflation however retreated to 0.2% matching the economic forecast. US TIC Flows Better than Expected In a third release, foreign purchases of long term treasuries during February were higher than expected. The three pieces of data combined to help set a tone of Dollar strength during NY trading. EUR/USD - Fundamental Data Favors Dollar
Overnight the Euro-Dollar pair came close to matching its Monday high, prior to the release of the ZEW sentiment data. After the weaker-than-expected report the euro started losing ground against the greenback. These Dollar-gains were extended after US releases came out. By 1:40 PM EST the pair had dipped close to 100 pips from its high and was trading near 1.5760. USD/JPY - Dollar Gains on Yen in NY Trading
After falling initially at the start of the week, the Dollar-Yen pair has been in a slight uptrend. US stock indexes started higher today then declined into the red, before pulling themselves back up into positive territory. In the currency markets, it proved to be enough to put the Dollar ahead of the Yen for the session and by 2 PM the pair was trading near 101.75. USD/CAD - Loonie Boosted By Record Oil Prices
The other big news today was crude oil futures setting a new record close to $114 per barrel. The news helped boost the Canadian Dollar, which gained on the greenback yesterday and in today's NY trading. The pair had started the week near 1.0275 and was about 100 pips lower as of 2 PM EST. Upcoming Releases Looking at the upcoming releases overnight, Germany and the Euro-zone post their consumer inflation data while the UK will reveal its claimant count and unemployment rate. Tomorrow, the US also releases consumer prices, along with building permits, housing starts, and industrial production. Canada will post data on manufacturing shipments. |
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