British Pound, US Dollar and Euro commentary is provided by Argentex for Tuesday 4th April.
It gradually lost ground against the euro and the dollar and this slide was not helped by Manufacturing PMI which unexpectedly dipped for the month of March.
It seems a while since economic fundamentals were discussed when analysing the FX markets. The temporary lull before the next Brexit debate reaches the headlines has given traders a chance to revert back to the traditional market movers that can be slightly easier to digest. Today we could see more of the same as Construction PMI is released which is expected to dip, and if so, will be another sign of an economic slowdown within the UK. Whether this has an impact on the pound awaits to be seen, but for now it all seems relatively quiet in the markets. Now, back to Brexit… (I told you it was only a temporary lull) – the European parliament will be making its declaration on Britain’s withdrawal from the EU and triggering of Article 50. As always, even if nothing extraordinary is proclaimed, this still has potential to upset the markets and create widespread volatility.
The Institute for Supply Management and Markit Economics released reports on surveys of US manufacturers conducted during March. The results showed a slowdown in activity to a six-month low, with Chris Williamson, chief economist at Markit stating “the post-election resurgence of the manufacturing sector is showing signs of losing steam”. JP Morgan said in a research note that although Trump’s failure to push through healthcare reforms hurt stocks, it has focussed lawmakers on tax reforms earlier than expected, which is what the stock market actually cares about. Trade Balance and Factory Orders out today won’t be as impactful as tomorrow’s ADP employment report, FOMC meeting minutes and Friday’s Non-Farm Payrolls.
The Euro should see some sensitivity to the latest ECB minutes on Thursday, as Euro watchers will be looking for greater clarity on the Governing Council’s policy outlook after last week’s ECB news flow.
Major data from the Eurozone today, with retail sales for Febuary released at 10am GMT . Expectations are for a decent figure at +0.5%, compared to the weak showing from January of -0.1%. Aside from today’s data, expect any updates from the poles in the French election, hinting LePen continuing her increasing popularity to quickly weaken the single currency.
The recent sacking of finance minister Pravin Gordhan was endangering the economy, and there are concerns over the serviceability of government debt, specifically the cost of supporting state energy firm Eskom. Ratings Agency S&P downgraded South African government debt to ‘junk’ status, which will increase borrowing costs further.
|S + P||2,358.84||-0.15|
|0800||EUR||Spanish Unemployment Change||-41.2K||-9.4K|
|1330||USD||Trade Balance 57.2||-46.0B||-48.5B|
|1500||USD||Factory Orders m/m||1.0%||1.2%|
|1530||EUR||ECB President Draghi Speaks||–||–|