Disappointing US data drags equities and USD lower

Thursday, April 23, 2015

European equity markets remained in negative territory in today’s trading session with the DAX, CAC, IBEX and Italian equity benchmark indices retreating between 0.2% and 1.2% amid ongoing concerns regarding Greece’s economic stability and poor US economic data.

On the other hand, the London equity benchmark index bucked the downtrend and edged higher today holding above 7,000. In the UK, retail sales including auto declined 0.5% in March missing analysts’ estimates of a 0.4% rise. Furthermore, the Public Sector Net Cash Borrowing increased to 6.7 bln in March from 6.2 bln in February, while Public Sector Net Cash Requirement was reported at 19.4 bln. Sterling came under some pressure after trading around 1.50 against the USD and dropped below 1.40 against the euro. Tesco recovered some of yesterday’s sharp losses and rose 1%. Sainsbury’s, Morrison and Associated British Foods also climbed higher between 0.8% and 1.6%, at the time of writing.

GBPUSD

GBPUSD Curncy (GBP-USD X-RATE)   2015-04-23 15-49-34

GBPEUR

GBPEUR Curncy (GBP-EUR X-RATE)   2015-04-23 15-49-18

On the US macroeconomic front, jobless claims increased 295,000 for the week ending 18th April versus analysts’ estimates of 287,000. In addition, Markit manufacturing PMI was declined to 54.2 in April compared to 55.7 in March, missing analysts’ expectations. New home sales dropped sharply by 11.4% in March against expectations of a 4.5% decline. The disappointing US economic data weighed heavily on market sentiment and added pressure to the US dollar with the USD index falling back towards 97.00 against a basket of currencies.

USD index

DXY Curncy (DOLLAR INDEX SPOT)   2015-04-23 15-48-58 

Crude oil prices rebounded to reach 4-month high following news that Saudi Arabia renewed its aerial assault in Yemen to target the Shiite rebels. Brent front month futures rallied over 3% towards $65 per barrel and WTI front month futures rebounded towards $58 per barrel amid renewed concerns of potential disruption in oil shipping across Middle East.   

Brent front month futures

COM5 Comdty (BRENT CRUDE FUTR  J 2015-04-23 15-52-25

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