Daily Market Report 19/04/2013

A relatively light economic calendar on Thursday saw the pound gain 0.6% against both the US Dollar and the euro. The retails sales figures from the UK failed to meet expectations; with March being one of the coldest on record largely being blamed.

These gains came as a surprise as the US also announced poor figures in the form of the initial jobless claims and the Philadelphia Fed manufacturing survey.

The initial gains against the euro were almost completely erased by the close of the European markets however as the IMF warned the UK that the level of austerity could seriously damage growth. Compounding the UK’s outlook, Mark Carney stated that central banks cannot deliver growth but only improve conditions. The general feeling amongst investors was that of caution as interpreting Carney’s comments simply lead to thoughts that he may be trying to lower expectations in time for the start of his tenure.

In Europe the German parliament approved a Cypriot bailout despite the German finance minister, Wolfgang Schäuble, labelling the Cypriot situation as ‘dramatic’, going on to state that Italy and Spain could be at risk of default if aid was not offered to Cyprus. Although he did state that the reforms within the euro zone should help revive the economy by 2014.

Another quiet day on the fundamental data front today, the main figures will be published from Canada as they announce their most recent inflation figures. It will be too early to expect any significant change as a result of the price of crude oil dropping this week.

As the week draws to a close, we can expect investors to look further ahead to next week as the UK’s much anticipated GDP figure due. Current trading ranges could be out of the window if the UK fails to deliver a positive figure. An unprecedented triple dip recession would be catastrophic to growth prospects. The IMF’s recent downgrade of the forecasted growth in the UK does not bode well. Many will be hoping that the most recent service sector figures will help drag the UK back into the black.

Key Announcements:

13.30pm – CAD – Consumer Price Index (Mar): Expected to fall to 0.2%