UK’s first prelim GDP for the year disappoints. The quarterly estimate came at 0.3%, below forecast of 0.5% and previous of 0.6%. The year on year figure came at 2.4%, also quite disappointing as it fell below previous results of 3.0%. The initial reaction was a drop in the pound, plunging about 45 pips against he dollar after the first minute of release. The pair eventually regained its momentum to close the day much higher. There seems to be more room to the upside on the GBPUSD considering the strength of the recent trend. The disappointing prelim GDP estimates adds to existing pressures of the upcoming elections. Although it may not be fully accurate in telling the true picture of the actual GDP figures considering that it only accounts for less than 50% of the data to be used eventually. In days to come, we expect a further rally from the GDPUSD.
US CB Consumer Confidence also declined to 95.2, from 101.4 in the previous month. This depicts a declining confidence by households. The index rebounded in March, only to give back this gains in April. The disappointing figures could be as a result of perceived weakness in the labour market, slowing in economic conditions and general softness in the short-term economic outlook. The index surveys respondents to rate the relative level of current and future economic conditions including labor availability, business conditions, and overall economic situation. The dollar continued it weakness across board and may fall lower in days to come.
New Zealand’s Trade Balance showed an impressive 631M surplus for April, largely surpassing previous of 83M and forecast of 315M. On a year on year basis, the report showed an annual trade deficit of $2.4 billion (4.9 percent of exports). This marked the largest annual trade deficit since the year ended July 2009. According to the RBNZ trade weighted index, the NZD was 2.1% higher in last month than in February 2015.
ANZ Business Confidence depicted growing business confidence in the New Zealand economy. Firms have shown positivity towards employment, investment and general business activities despite easing in April. This was majorly boosted by the service sector and is in line with the country’s prospects of economic expansion.
For the rest of the day, we have the following on the calendar:
From the US, Its another FOMC day. The focus will be to listen for clues by the Feds and how they acknowledge the recent bout of disappointing data from the US. Will the Feds down play the recent weakness as a temporary situation? Or will they seek more time to study additional data before making a decision on the actual economic condition? The dollar has been falling recently. Good data release through the week, along with an hawkish view from the Feds could boost the currency back to positivity.
By 9:00 pm GMT, we have New Zealand’s Official Cash Rate and the RBNZ Rate Statement. The cash rate is expected to be held at 3.5%.