Daily Market Report 14/03/2013

Yesterday we saw some very minor relief for the pound. However, once again the relief was short lived.

The pound climbed to 0.7% against the euro and 0.5% against the US dollar in early morning trade amid rumours that the government may announce a delay in fiscal austerity measures in next week’s budget.  However as the rest of the week is completely devoid of any UK fundamental data, the pound will be at the mercy of the other major economies.

The euro suffered yesterday, after data revealed that industrial production fell by 0.4% in January, against an expected fall of 0.1%.

In the US, we had data that revealed increase of 1.1% in retail sales for the month of February. This swiftly erased any gains that the pound had made over the course of the morning, as the US dollar strengthened across the board as the data once again stoked up expectations that the Federal Reserve may look to scale back its stimulus programme.

Overnight we had impressive job figures released from Australia with the number of employed people rising by 71,500 in February and the unemployment rate remaining at 5.4%. The data illustrates the underlying strength in the economy and thus it wouldn’t be a surprise if the Australian dollar continued to reach new highs against the pound.

In New Zealand’s monetary policy statement, the Reserve Bank of New Zealand Governor Graeme Wheeler commented that the recent appreciation of the New Zealand dollar may be affecting profitability and exports. Whilst keeping interest rates unchanged at 2.5%, there are hints in Graeme Wheeler’s statement that if the New Zealand dollar continues to be too strong for exporters, then a rate cut in the future could not be ruled out.

In short, the pound has nothing supporting its position for the rest of the week and thus yesterdays sterling gains could well be short lived. As stated above, investors will be looking to data from the other major economies to position themselves on sterling rates.

Key Announcements:

9.00am – EUR – ECB Monthly Report.

10.00am – EUR – Employment Change (QoQ) (Q4): Previous figures came in at -0.2%.

12.30pm – USD – Initial Jobless Claims (Mar 10th): Expected to increase to 350,000.

12.30pm – USD – Producer Price Index (YoY) (Feb): Expected to increase to 1.7%.

13.00pm – USD – FOMC Member Raskin Speech.