UK services-sector purchasing manager’s index was revised down slightly to 56.3 in the final reading. The data gave no help to the Pound and there was sustained selling pressure especially with unease over the AstraZeneca vaccine undermining confidence. Sterling fell to lows near 1.3730 to the Dollar and 1.1540 against the Euro.
The MHRA regulator recommended that under 30’s should be offered an alternative to the AstraZeneca vaccine in it’s latest guidance but added that the benefits clearly outweigh the risks. Sterling rallied on the news and the Euro retreated to near 1.1590.
RICS house prices index rose to 59% from 54% previously. An Imperial College survey showed the link between covid cases and deaths was breaking because of the vaccine rollout, which helped Sterling sentiment and maintained the optimism that the re-opening of the economy would remain on track. Sterling traded just above 1.3750 against the US dollar.
The overall US trade deficit widened to a record $71.1bn for February from a revised $67.8bn the previous month as exports declined at a faster pace than imports.
Federal Reserve (Fed) minutes from March’s meeting stated that participants concluded that the economy stood distant from the central bank’s objectives and that it would take some time to achieve the targets. There were also comments that inflation risks had risen, but the situation overall was balanced. The majority view continued to indicate that the central bank would take a cautious stance in removing stimulus despite uncertainty over medium-term direction.
Fed Governor Brainard stated that the economic outlook had brightened considerably, although it will be some time before realized outcomes are achieved. Overall reaction to the minutes was contained, although the dollar posted slight net gains.
The Euro traded with a mildly positive bias against the Dollar overnight and was last seen hovering near the top end of its range, around the 1.1875 region. With the pair managing to regain some positive traction amid a softer tone surrounding the Greenback, the underlying bullish tone in the financial markets weighed on the safe-haven Dollar, which, in turn, extended some support in the pair.
The single currency was further supported by Wednesday's Eurozone data, which showed business activity had bounced back to growth in March. This added to the optimism led by reports that Germany, France, Italy, and Spain will have sufficient supplies to vaccinate at least 57% of their populations by the end of June, earlier than projected.
As of writing, the Euro currently trades around the 1.1885 mark against its US counterpart.
Data to watch
13:30 - USD - Unemployment Claims
17:00 - USD - Fed Chair Powell Speaks
Posted in Daily Market News on Apr 8 2021