USD mixed as healthcare changes absorb traders' thoughts

Today's Highlights

• Sterling improves on retail sales and Article 50 advent

• USD mixed as healthcare changes absorb traders' thoughts

• Surprise NZ trade deficit hits NZD

 

Current Market Overview

Sterling has had a few good days as the markets prepare for the ending of uncertainty over the triggering of Article 50. Sterling was also helped by a surprise rise in retail sales. At 1.4% growth in the month to February, the data was well above even the optimistic forecasts of around 0.5%. Yet again, gloomy forecasts have been beaten by positive UK data. Today's release of the British Bankers' Association (BBA) mortgage lending data is also forecast to be a little less positive than in January, but I suspect we will see yet another upside surprise. Sterling could well waltz into the weekend with a spring in its step. Even Bank of England (BoE) Monetary Policy Committee (MPC) member, Dr Gertjan Vlieghe, comments that he does not believe higher inflation rates will prompt higher interest rates.

By way of contrast, the forecasts for New Zealand's trade balance figure suggested a surplus might be on the cards, but we were disappointed to see that, rather than the NZD 180 million surplus the markets had expected, the actual data showed a NZD 18 million deficit. In broad brush terms, this is only just the wrong side of a balance, but it was negative for the NZD anyway. The Kiwi Dollar lost a cent or so against Sterling and similar amounts elsewhere. There is a good chance we will see some correction of that move this morning.

The US Dollar is weaker ahead of an expected decision on Trump's healthcare legislation. Having spiked to test $1.08 yesterday, the Euro-USD rate is slipping in anticipation of more clarity on the changes being made to the US healthcare system. Big-Pharma will watch with keen interest. The only other US data today is the durable goods orders release. That is expected to be down on the previous month but still in growth territory.

Eurozone data today centres on Purchasing Managers' Indices (PMI) from various parts of the Eurozone. Most forecasts suggest little change, but that is a positive in some ways. The Euro didn't react positively to the European Central Bank's (ECB) economic bulletin, in spite of the mildly upbeat tone. The ECB thinks "the ongoing economic expansion will continue to firm and broaden." This is in spite of the expected turmoil in France over the upcoming presidential election and the more important German elections due in September.

Oh - and it is Mothering Sunday this weekend. However, you've an hour less to get her a pressie, because the clocks go forward on Sunday morning as well. Hurry, hurry, you know she deserves it. To all the mums out there, have a great day on Sunday ....even if you do end up cooking and tidying up and hoovering before the family arrives...