Daily Market Report 04/04/2014

GBP

George Osborne says government will keep a 'close eye' on housing market, with London homes now selling for double than the rest of the UK, once again creating fears of a bubble.

London house prices have risen by almost a fifth over the past 12 months, according to Nationwide, and are now 20% above their pre-crisis peak. In the UK overall, houses are selling for 9.2% more than a year ago.

The IMF also warned that a slow economic recovery will keep interest rates at historic lows, presently at 0.5%.

Sterling gains were fairly muted yesterday as a result.

EUR

Mario Draghi rejected the IMF's call for instant action to combat growing deflationary pressures as the European Central Bank took on a wait-and-see approach regarding ways to boost growth.

The euro fell after Draghi said the ECB's ruling council had discussed how to implement quantitative easing – the purchase of financial assets to create money – after news this week that the annual inflation rate in the 18 nation Eurozone had fallen to just 0.5%.

Analysts suggested Draghi was playing for time and hoping to stimulate exports by "talking down" the euro.

Despite speculation ahead of yesterday's meeting, the ECB left its key policy rate at 0.25% and declined to take steps that might increase the flow of credit to businesses and households.

INR

India’s rupee headed for its biggest weekly loss in more than two months on speculation the central bank will curb currency appreciation to protect exporters.

The rupee extended its retreat from an eight-month high, reached on April 2nd, declining 0.8% from a week ago.

Today

US nonfarm payrolls data is due for release this afternoon with an expectation of an additional 196,000 jobs added in March which may provide further insight into the outlook for Federal Reserve tapering.

Key Announcements: 

13.30pm – USD – Nonfarm Payrolls (Mar): An additional 196,000 jobs are expected to be added.

13.30pm – USD – Unemployment Rate (Mar): Expected to fall to 6.6%.

13.30pm – CAD – Unemployment Rate (Mar): Expected to remain at 7%.