Daily Market Report 19/03/2014


US inflation was muted in February and housing starts fell for a third straight month, giving the Federal Reserve plenty of room to keep interest rates low even as it scales back the amount of money it is pumping into the economy.

The data painted a picture of sluggish economic growth in the first quarter as unseasonably cold weather disrupted activity. A jump in building permits last month, however, also offered cautious optimism for an acceleration once the weather warms up. Inflation for the month of February came in lower at 1.1% with the Fed targeting an annual level higher than 2%.In a separate report, the Commerce Department said housing starts fell 0.2% to a seasonally adjusted annual rate of 907,000 units in February.

A two day monetary policy meeting of the Federal Reserve started yesterday. Economists expect the central bank to announce another US$10 billion cut to its bond-buying program. Fed Chair Janet Yellen will deliver her first press conference after the conclusion of the meeting tonight.


The German ZEW Survey – Economic Sentiment tumbled to 46.6 points in March. Market consensus pointed only to a decrease to 53 points. Reasons for the decline included uncertainty caused by recent US unemployment data and concern about the prospects for China, as well as the political uncertainty in the Ukraine.

Meanwhile, the Eurozone ZEW Survey – Economic Sentiment slid to 61.5 points in March, from 68.5 points in February, below projections of a drop to 67.3 points.

European car sales also rose for the sixth month in a row in February motorists registered over 860,000 cars, 8% more than the same time last year with Spanish sales growing 17.6%


Investors are likely to stay clear of the pound before Britain releases its central government budget and jobs data later this week. Analysts expect a restrictive budget from finance minister George Osborne, putting the onus on the Bank of England to keep monetary policy loose to ensure growth.


We have UK unemployment claimant count and the unemployment rate for January expected to remain unchanged at 7.2%. At 12.30pm the UK Government will release their annual budget report. Later on in the afternoon the Fed will release their interest rate decision and announce if they are going to reduce quantitative easing a by a further US$10 billion.

Key Announcements:

12.30pm – GBP – UK Budget Report.

18.00pm – USD – Fed Interest Rate Decision: Expected to remain at 0.25%.

18.30pm – USD – Fed Monetary Policy Statement.

21.45pm – NZD – Gross Domestic Products (Q4): Expected to drop to 1%.