European Majors Lose Ground on Weak Reports, US Dollar Tries to Recover
British pound weakened after today's data. Earlier today, the pound rose against the US dollar to the highest level ever since the UK voted to withdraw from the EU, receiving support from the weakness of the US currency and the belief that Brexit might not be as tough as investors feared.
The UK Office for National Statistics said wages in the three months to February rose by 2.8%, unchanged from the growth rate in the three months to January and below a median forecast of 3.0%. The unemployment rate fell to 4.2%, its lowest since the three months to May 1975. The number of people in employment in the UK rose by 55.000 in the three months to March, in line with expectations. Jobless claims fell to 11.600 from 15.100 in the three months to February. Meanwhile, UK Chancellor of Exchequer Philip Hammond stays optimistic on employment and productivity forecast.
The euro pulled back from three-week highs against the US dollar, with the EUR/USD dipping 0.08% to 1.2370. The euro came under some selling pressure after a report showing that German economic sentiment deteriorated sharply again in April amid concerns over heightened international trade tensions.
German ZEW economic sentiment fell to 87.9 in April, down from prior 90.7 and consensus of 88.0. ZEW expectation gauge dropped to -8.2, down from 5.1, below consensus of -1. Eurozone ZEW Economic Sentiment also headed lower, dropping from 13.4 to 1.9 points, the lowest since July 2016. This fell well short of the estimate of 7.3 points.
US dollar is trying to recover after today’s data and US Treasury Secretary Steven Mnuchin statement regarding Russia and China devaluation. US housing starts grew to 1.32m annualized rate in March. Building permits increased to 1.35m. Industrial production picked up by 0.5% mom in March, capacity utilization rose to 78.0%.
China’s GDP growth figures for the first quarter of 2018 came in at 6.8% year-on-year, slightly above market expectation of 6.7%. The National Bureau of Statistics also reported, that on a quarterly basis, GDP in the first quarter jumped 1.4%, compared with the revised growth of 1.6% in the October-December period. Analysts had previously expected growth of 1.5%.