12 Apr 2016

Yesterday, a good day to be Crude

United States Dollar: The USD was anticipating a tough reporting session this week. However surprisingly US Stocks posted solid gains overnight which was mostly led by energy stocks. Today we see the start of the big banks earnings releases. Unfortunately analysts are predicting a drop of up to 20% from the releases from the six biggest U.S. banks over the next few days. If data proves as poor as forecast, analysts will have additional traction in their arguments when referring to a global slowdown. We have seen the USD strengthen as markets position themselves for the USD retail sales and PPI data which is due today from 13.30 GMT. The GBP made gains yesterday after data showed that the UK consumer price index climbed 0.5% from expected 0.4% forecast and the 0.3% increase seen a few months ago. This continued slow climb is exactly what the markets wanted to see It was also the biggest increase in prices since December 2014, when CPI also rose 0.5%. Core inflation, which excludes energy, food, alcoholic beverages and tobacco, accelerated to 1.5% in March from 1.2% in February. Higher air fares and clothing prices contributed to the increase, partially offset by a fall in food prices. Today sees no high level releases for the GBP and modest trading ranges are expected.

We expect a range today in the GBP/USD rate of 1.4200 to 1.4290

Euro: Yesterday the EUR had a quiet day with German CPI and WPI coming in as forecast the EUR barely reacted. This morning has seen the French CPI also hit target but it cannot seem to overpower the USD’s climb. With the USD starting to reverse its losses and inflationary data expected to come in as positive we are expecting the USD to gain and the EUR move conversely as the week ends

We expect a range today in the GBP/EUR rate of 1.2525 to 1.2595

Aussie and Kiwi Dollars: Chinas exports rose 18.7% in March compared to March last year. Imports did drop but the drop was relatively small. When exports rise and imports fall this is viewed positively. The AUD benefits from this, being a main trading partner of China, and we saw the AUD and NZD climb yet again. The AUD hit levels against the USD not seen since late June and the Kiwi broke 0.695 which also has not been seen (other than a brief touch last week) since mid-June 2015. The antipodean currencies seem to be the top performers of the week and with oil prices climbing, from positive reports that Russia and Saudi Arabia may have reached a consensus, is only going to improve the commodity based currencies. Adding copper and iron ores’ strong performance will cement the recent gains. As long as the employment data (Released 2.30am GMT) comes out as positive, levels of resistance will be broken.

We expect a range today in the GBP/AUD rate of 1.8450 to 1.8600

We expect a range today in the GBP/NZD rate of 2.0495 to 2.0620

Data Releases

AUD: MI Inflation Expectations, Employment Change, Unemployment Rate

EUR: French Final CPI m/m

GBP: BOE Credit Conditions Survey, 30-y Bond Auction, CB Leading Index m/m, RICS House Price Balance.

NZD: Business NZ Manufacturing Index

USD: Core Retail Sales m/m, PPI m/m, Retail Sales m/m, Core PPI m/m, Crude Oil Inventories, Business Inventories m/m, 10-y Bond Auction, Beige Book.

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