The US dollar managed to regain some of its early morning losses against most of its counterparts following the release of fairly positive economic data yesterday afternoon.

The US dollar managed to regain some of its early morning losses against most of its counterparts following the release of fairly positive economic data yesterday afternoon.

The US dollar started on the back foot yesterday morning over ongoing concerns over the economy following last Friday’s disappointing GDP figures. But data from the US revealed that the pending home sales index rose by 1.5% in March surpassing expectations of a 1% gain and personal spending surpassed expectations in March rising to 0.2%. As a result the US drew some strength in the afternoon but gains were limited ahead of Wednesday’s monetary policy statement and Friday’s non-farm payroll figures.

Despite disappointing economic sentiment and consumer confidence figures, the euro drew support yesterday following the end of the political stalemate that had dogged Italy over the last two months. As a result Italy saw its borrowing costs on five year and 10 year bonds fall to the lowest since October 2010 and the euro finished 0.3% higher against both the pound and the US dollar by the end of European trading hours.

Sterling finished marginally lower against most of its counterparts yesterday on what looks like profit taking following last week’s gains. However sterling does look to be well supported by last week’s impressive first quarter GDP figures. Data from the construction and service sectors are due for release later this week and will give investors a good indication of whether last quarter’s growth has been sustained. Data today is set to suggest that mortgage approvals increased in March.

The pound suffered a setback overnight as GfK consumer confidence fell in April as households seem to be concerned about their personal finances. The yen weakened also as industrial production in Japan grew less than estimated in March giving scope for continued Bank of Japan action.

Today looks set to be fairly busy on the economic data front. From the euro zone we have unemployment figures from Germany, Italy and from the euro zone as a whole as well as inflation figures coming from the euro zone. Data from Canada is set to suggest that growth remained at 0.2% in February and US consumer confidence is forecasted to rise in April.

Key Announcements:

8.55am – EUR – German Unemployment Rate (Apr): Expected to remain at 6.9%.

9.00am – EUR – Italian Unemployment Rate (Mar): Expected to increase to 11.7%.

9.30am – GBP – Mortgage Approvals (Mar): Expected to increase to 52,500.

10.00am – EUR – Euro Zone Consumer Price Index (Apr): Expected to decrease to 1.6%.

13.30pm – CAD – Gross Domestic Product (Feb): Expected to remain at 0.2%.

14.45pm – USD – Chicago Purchasing Managers Index (Apr): Expected to improve to 52.5.

15.00pm – USD – Consumer Confidence (Apr): Expected to improve to 60.8.