EUR

Eurozone inflation dropped more than forecast to its slowest
in four years down to 0.5% from 0.7% for the month of March – way below the ECB’s
target of less than 2%.

The data may well put the central bank under pressure on
Thursday to take action to assist with the single bloc’s recovery. On March 25^th
ECB President renewed his vow to “take additional monetary policy measures” if “any
downside risks” appear; thus Thursday’s press conference could provide some interesting
reading.

EUR

Eurozone inflation dropped more than forecast to its slowest
in four years down to 0.5% from 0.7% for the month of March – way below the ECB’s
target of less than 2%.

The data may well put the central bank under pressure on
Thursday to take action to assist with the single bloc’s recovery. On March 25^th
ECB President renewed his vow to “take additional monetary policy measures” if “any
downside risks” appear; thus Thursday’s press conference could provide some interesting
reading.

Initially the Euro surprisingly strengthened but these gains
were erased as the day went on with the GBPEUR finishing unchanged on the day.

GBP

Mortgage approvals for the month of February declined more
than expected falling to 70,309 from 76,753 in January. Unsurprisingly the
pound weakened off the back of this data.

USD

Federal Reserve Chair Janet Yellen made a speech yesterday
afternoon which dampened demand for the US dollar.

Yellen commented that there was considerable slack in the economy
and labour market and that considerable support would be needed for the economy
for some time. This is somewhat of a contrast to what she said a month earlier,
that quantitative easing should finish by October and that we could see an
interest rate rise six months after.

As mentioned above the comments did cause a broad US dollar
sell-off.

Today

Data from the euro has painted a mixed picture of the state
of manufacturing in the Eurozone. In France and Italy manufacturing expanded
more than expected but in Germany and overall in Europe output slowed slightly.

Mixed data regarding employment in the Eurozone as well. In
Germany and in the Eurozone unemployment remained at 6.7% and 11.9%
respectively but in Italy unemployment rose to 13%.

UK manufacturing slowed slightly as well down to 55.3 in
March causing the pound to be on the back foot this morning. Construction and
service sector figures are due for release later this week which will give more
guidance for the direction of the pound.

US data due for release this afternoon suggests that we
could see the US dollar rebound as ISM manufacturing is set to expand further
to 54.

Key Announcements:

14.00pm – USD – Construction Spending (Feb): Expected to
increase to 0.2%.

14.00pm – USD – ISM Manufacturing PMI (PMI): Expected to
expand to 54.