Sterling paused for spring statement

UK Chancellor of the Exchequer, Jeremy Hunt, will deliver his spring statement today. No one in Government calls it a budget, but it is. If the pundits are right, the emphasis will be on getting people into work and growing the economy. That would be super. For now, traders have paused on the pound – it is still in better shape than it was last week. The GBPUSD rate is still around $1.2145 although the GBPEUR rate has dropped nearly a cent since yesterday’s high of €1.1395. That pair starts the day at €1.1305 but more of that below. The budget is really the only big ticket item in the UK calendar for today, so come on Jeremy, show us what you’ve got.

US inflation holds up, renewing rate hike belief

US consumer price inflation remained strong in February at 6.0% headline rate and 5.5% core inflation (stripping out the most volatile elements). So, in spite of the banking industry melee after the collapse of SVB, the markets have renewed belief that the Federal Reserve will deliver an interest rate hike at their next meeting, albeit a smaller one of 25 basis points perhaps. That slight mood shift found a few USD buyers after a poor week for the US currency. So, although the GBPUSD rate was testing $1.22yesterday, it is half a cent lower at $1.2145 this morning. The euro-US dollar rate is also down a little, but only as far as $1.0730, still two cents higher than last week’s lows. Today will deliver a veritable smorgasbord of US data which includes retail sales, business sentiment indices, business and crude oil inventories, producer price indices and a measure of inbound investment into the US Treasury market. All can be influential, so hang on for a bumpy rise.

Euro gains buyers after surprisingly strong French inflation

While those in the financial markets try to pre-empt the European Central Banks’s decision (due on Thursday), this morning’s French inflation data delivered a surprise uptick. That supports the expectation of another ECB rate hike but perhaps not the 50 basis points that the markets have priced into the euro’s value. For now, the GBPEUR rate has dipped from €1.1395 yesterday to €1.1305 this morning but the hasn’t made the same move. That is down from yesterday’s highs at $1.0730 right now.

Strong Australian employment data expected overnight

If the forecasts are right, there is every chance the Australian dollar will be stronger by tomorrow morning. The consensus forecast is that Australia added circa 48,000 jobs in February, bringing the unemployment rate down to 3.6%, after a spike to 3.7% in the January data. If all of the forecasts are right, that should boost the AUD and the GBPAUD rate, which starts today at AUD 1.8205, should ive back some of the gains it has made in the past week. AUD 1.80 is the obvious support level but we saw this pair dip below AUD 1.79 last week.