Daily Market Report 15/04/2013

The US fell into the spotlight on Friday as retail sales and consumer sentiment figures fell below expectations.

However, instead of weakening the US dollar, the opposite occurred. In a week where we saw currency moves dictated by investor’s appetite for risk, it looks like the data gave reason for profit taking to occur and thus the US dollar to strengthen, on the grounds that concerns over the outlook of global growth may have resurfaced. Despite this, US dollar investors will be pleased to know that the pound did finish 0.51% higher on the week against the US dollar.

Talk on Friday morning that Cyprus had requested to increase the €10bn bailout fund weakened the euro in early trade. However sterling’s gains against the euro were swiftly erased as the day went on as an IMF spokesman confirmed that Cyprus hadn’t requested for additional bailout funds. By the end of the week, sterling lost 1.35 cents against the euro.

So where next for sterling? With a busy economic calendar for the UK this week, fundamental data looks set to be a driver of markets this week.

On Tuesday we have the rate of inflation and producer price index figures confirmed for March.

On Wednesday we have the unemployment rate confirmed and all eyes will be on the Bank of England when the minutes will be released – will we see in increase in the vote for additional monetary stimulus?

Thursday’s main talking point for the UK will be the release of the retail sales figures for March – a good figure here should alleviate concerns of a triple dip recession for the UK.

Data from China overnight showed that growth unexpectedly slowed in the first quarter from 7.9% to 7.7%. The news has spurred demand for safe havens with the US dollar on the front foot this morning. Data is pretty thin on the ground today and with major data out from the UK later on this week, we suspect little movement on sterling crosses today apart from perhaps some US dollar strength on safe haven plays.

Key Announcements:

10.00am – EUR – Trade Balance (Feb): A surplus of €9.9bn is expected.

14.00pm – USD – NY Empire State Manufacturing Index (Apr): Expected to reduce to 6.50.