All eyes on US ISM Non‐Manufacturing

It was a relatively quiet day in terms of top tier data yesterday. The only UK data available was construction PMI released early in the morning which showed that Britain’s construction industry jumped unexpectedly to a four month high last month, adding to the evidence that Britain’s economy has started the year strong. PMI data compiled shows that the sector grew a full point to 60.1, which beat expectations of 59.0, the highest level on record since October last year. Growth was seen across the board in the construction sector but mainly in housing, commercial and civil engineering sectors. In other news, the Bank of England’s chief currency dealer was dismissed after at least 20 violations of the institutional internal policies were unearthed following a review into whether central bank staff knew about currency rigging, while Barclays have set aside £750m for a potential fine in relation to FX rigging. Given that GBP/USD struggled at points during the session, reaching lows of 1.5344 interbank (IB), the pound was able to reverse the downward pressure and re‐test 1.54 (IB), only to fall short at 1.5390 (IB). Data has been scarce and 1.54 (IB) remains a psychological barrier to the upside in the near term. GBP/EUR bounced off 1.3774 (IB) during yesterday’s London trading hours before retracing back and settling at 1.3723 (IB). Today remains light in terms of top tier data with Services PMI being the only data being released.

Yesterday was slightly busier in terms of data; first up was German retail sales which increased 5.3% in real terms and 4.1% in nominal terms compared with the corresponding month last year. Next up was Spanish unemployment change which showed the number of Public Employment Services had dropped in February to 13,538 people and puts the total at 1,512,153 overall. This is the best performance of unemployment since 2001. An interesting survey carried out yesterday showed the chances of Greece leaving the eurozone in the next 12 months are the highest since late 2012 even though Athens have been given a four month stay. Data remains light again today with no top tier data due. What we do have to look at is some low impact data in the form of Markit services PMI data from Spain, Italy, France, Germany and the eurozone proper – the results of which are not expected to create too much volatility. The highlight from the European section of the economic calendar is likely to come via eurozone retails sales at 10.00am, forecast to show a shortfall in comparison to previous numbers published. EUR/USD is trading back below 1.1200 (IB) but still within its 6 week range of 1.1098 (IB) to 1.1542/63 (IB). The US provided us with a distinct lack of data yesterday as the market gears up for top tier releases from today onwards. Yesterday saw the IBD/TIPP Economic Optimism Index gain 1.6 points (3.4%) in March, posting a reading of 49.1 vs 47.5 in February. GBP/USD traded in a tight 54 point range throughout yesterday ‐ point lows of 1.5397 (IB) and lows of 1.5344 (IB). As highlighted in yesterday’s report, today brings ISM non‐manufacturing PMI due out this afternoon which is today's only top tier data. ADP employment change has become a particular highlight as market participants look for clues as to what the non‐farm payrolls report and unemployment figures will produce on Friday. The day does bring some potential to provide volatility and with consensus figures sitting short of previous levels, the market awaits some dollar losses, particularly versus sterling. MBA Mortgage approvals and Markit services PMI could also hurt the dollar should analyst's expectations be realised.