Daily Market Report 01/04/2014

EUR

Inflation across the euro area rate rose by 0.7% in April, on an annual basis, up from 0.5% in March.  At just 0.7%, Eurozone is well below the European Central Bank's target of close to, but below 2% and lower than economists had expected. Causing the Euro to weaken off initially after the figures were released. Today's figures will probably fuel concerns that Europe risks sinking into a deflationary slump. Falling energy costs continued to drag inflation down, while prices across the Service sector jumped this month

Germany's labour market continues to strengthen with joblessness falling for the fifth month in a row in Europe's largest economy. The German unemployment total fell by 25,000, in seasonally adjusted terms, to 2.872m. The unemployment rate remained steady at 6.7%, compared to a Eurozone average of 11.9%The Spanish economy is growing at the fastest pace in six years. Spanish GDP rose by 0.4% in the first three month of this year, in line with the Bank of Spain's estimate last week. And on a year-on-year basis, the economy is 0.6% bigger.

USD

The US economy barely grew at all in the first three months of this year. That GDP rose by just 0.1% in the first quarter. That’s the weakest reading since the last quarter of 2012, and much worse than economists had expected. The consensus was for growth was 0.3% on a quarterly basis. This saw the dollar weaken of considerably in the afternoon trading session.

Overnight there was some respite for the dollar as the federal reserved reduced its monthly asset buying to US$45 billion, its fourth straight US$10 billion cut also stating that further reductions are likely to be in US$10 billion increments. 

Today

Data from the UK this morning has caused the pound to rally after with manufacturing activity surging to a 5 month high to 57.3, way beyond expectations.

Later on in the afternoon we have the US Manufacturing index for April expected to be slightly higher at 54 as well as reduction in jobless claim which could be positive for the dollar.

Key Announcements:

13:30pm – USD – Janet Yellen Speech.

13:30pm – USD – Initial Jobless Claims: Expected to fall by 10,000.

15:00om – USD – ISM Manufacturing PMI: Expected to come in higher at 54.