Sterling shines as inflation at 15-month high

Today’s Economic events

• UK BRC retail sales monitor y/y -0.70% vs. 0.10% previously
• Japan bank lending y/y 2.0% vs. 2.20% previously
• Australia NAB business confidence 6 vs. 3 previously
• German Final CPI m/m 0.80% vs. 0.80%
• German WPI m/m 0.30% vs. 0.30%
• Japan prelim machine tool orders y/y -21.20% vs. -22.50% previously
• UK CPI y/y 0.50% vs. 0.30%; core CPI y/y 1.50% vs. 1.30%
• UK PPI Input m/m 2.0% vs. 2.40%; PPI output m/m 0.30% vs. 0.30%
• US NFIB small business index 92.6 vs. 93.90

Coming Up

• The US Import Prices
• Federal budget balance
• New Zealand FPI

The markets got off to a busy start today with Japanese yen attempting to trim some of its losses. Japan’s finance minister warned against the excessive yen strength keeping up the pressure from Japan on the recent strong declines in USDJPY. Following the comments, USDJPY attempted to push higher after prices formed a base near 107.775. Japan’s bank lending increased 2.0% compared to 2.20% previously.

The commodity-linked currencies were also seen trending higher today. AUDUSD surged an impressive 0.88% trading at a 5-day high near 0.766. Australia’s NAB business confidence data released today showed the index moving higher to 6 from 3 a month ago. NZDUSD was also higher today, rising 0.45% to trade at a 5-day high of 0.689.

Asian equity markets were mixed with the Nikkei recovering with 1.13% gains for the day while the Shanghai Composite fell 0.31%.

In Europe, the euro posted some strong gains in the opening hours as the dollar slipped across the board. EURUSD touched a 6-month high at $1.1465. Dallas Fed President Robert Kaplan said in an interview on Monday that while he was open to rate hikes in June, he ruled out April and warned against raising interest rates too quickly.

Data from Europe included the German final CPI, which increased 0.80% in March, same as in February and matching expectations. Wholesale price index was also positive, gaining 0.30% in March following 0.50% declines in February.

UK’s inflation data released by the ONS today showed a surprise 0.50% increase in the headline CPI, while Core CPI also gained 1.50%, above estimates of 1.30%. UK’s consumer prices gained at the sharpest pace in 15 months which saw GBPUSD surge strongly on the data, currently up 0.53%, trading near a 5-day high of $1.4344. UK’s producer price index was also stronger, with PPI input rising 2.0% while PPI output was up 0.30%, both rising above February’s print. European equities are mixed with the German DAX up 0.09% while the London FTSE100 is down 0.10%.

In the US, economic data will see the release of import prices which is expected to rise 1.0%.

A weaker print could the dollar continue to fall. US equity market futures are pointing to a modest opening with the Dow Jones futures up 0.19% and the S&P500 futures up 0.29%. US equities remain on shaky ground as Alcoa’s earnings yesterday showed a slump in profits.

On the commodity front, Gold prices were seen hovering above $1250 in early European trading today testing intraday highs of $1262. The precious metal is up 0.24% currently. WTI Crude Oil prices are back to the bullish streak with Crude oil futures up over 1.0% in today’s trading reclaiming the $40 handle, to currently trade at $40.70 a barrel.