As expected from the UK, interest rates were held at 0.5%, with the MPC voting unanimously to keep interest rates at record lows. However, the minutes released did reveal that policy members are disagreeing over the likely direction of inflation.
The UK government has hit its target for deficit reduction for the last financial year, as the British deficit fell to its lowest level since the financial crisis. The Office for National Statistics reports that public sector net borrowing in 2013-14 came in at £107.7bn, or 6.6% of GDP. This is £7.5bn lower than the same period in 2012/13, when it was £115.1bn.
Early morning saw the release of key economic indicators for the Eurozone which came in better than was forecast. Markit Manufacturing PMI came in at 53.3, up from 53, Markit Services PMI came in at 53.1 up from 52.2 and the Markit PMI Composite came in at 54 from 53.1. This is very good data from the Eurozone and shows strong growth for the two economic indicators that have a strong bearing on GDP growth.
Not surprisingly we did see the euro gain some ground on the release of this data.
Data from the US was disappointing yesterday. Markit Manufacturing was down marginally from 55.5 to 55.4. This reduction is still being blamed on the poor winter weather conditions. Also new home sales showed a decline in March, coming in down at 384,000 from 449,000 a month earlier.
Quiet in terms of data out from the UK and Eurozone today. Mario Draghi is speaking today at 11am.
In the USA today, data is again expected to disappoint. Durable goods orders are expected to fall, initial jobless claims expected to rise and continuing jobless claims expected to increase.
11:00am – EUR – ECB President Draghi Speech.
13.30pm – USD – Durable Goods Orders (Mar): Expected to fall to 2%.
13.30pm – USD – Initial Jobless Claims: Expected to rise to 310,000.