Daily Market Report - 23/04/2015

The monetary policy committee announced yesterday a unanimous decision to keep interest rates unchanged at 0.5%. The key announcement was all of the members deciding that the next interest rate adjustment would be to the upside, eliminating concerns over interest rate cuts due to low inflation. These comments caused a sharp rally of the Pound,  gaining over 1% against both the Euro and the Dollar.

Elsewhere in the news, the latest election polls showed the Conservatives leading at 35% with Labour marginally behind at 34%.

There was market talk yesterday that despite continued setbacks in negotiations between Greece and their European counterparts, some progress is being made. Creditors have reduced demands for Greece and say there could be scope for a potential short term Greek default in order to allow more time for negotiations.

News coming out from Switzerland has had a negative impact on the Euro after the SNB (SWIIS NATIONAL BANK) announced that more financial institutions would be subject to negative interest rates, this is due to the ties between Switzerland and the EU.

A positive note coming from the Euro-zone yesterday was the German Government raising their growth forecast to 1.8% from 1.5% in 2015 and exports for year increasing 4.7%. German economy minister ‘Gabriel’ says that weak Euro and oil prices will drive growth and unemployment on the Euro zone.

The US was given a boost yesterday as existing home sales came out positive at 5.19 million against the consensus of 5.05 million, however the housing price index remained in line with consensus at 0.7%. This is an increase on the previous month and shows signs of a recovery in the U.S property market. Applications for U.S. home mortgages rose last week as interest rates declined. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 2.3 percent in the week ended April 17. Despite lower mortgage rates, the gain was driven largely by purchase applications.

Key Announcements
EUR: 9:00 - Markit Services PMI (APR) expected to rise to 54.5 from 54.2
EUR: 9:00 - Markit manufacturing PMI (APR) expected to rise to 52.6 from 52.2
GBP: 9:30 – Public Sector Net Borrowing £6.216
USD: 1:30 - US unemployment claims

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