US housing market slowing

One of the economic bellwethers that the Federal Reserve watches is the US housing market?and?we saw a 4.3% drop in total existing home sales in?the month of?March. That was a?larger?decrease than any of the market forecasts and?certainly?signals I need for the Federal Reserve to start discussing interest rate cuts even if they haven't done so already.?Many in the markets?are expecting?the Federal Reserve,?along with?the European Central Bank and the Bank of England,?to start cutting interest rates in June.?There is a fair amount of disagreement over the pace and frequency of?any?further interest rate cuts, so there will be volatility leading up to the June central bank meetings and?subsequent to?that. Aside from domestic economic data, The US dollar is?being strengthened?by investor nervousness over the situation between Israel and Iran. The repercussions from a response could be far-reaching and would?certainly?strengthen the currencies that?are considered?to be safe havens. i.e. The US dollar, the Japanese yen and?to?a lesser degree, the euro. Most other currencies are considered?to be?higher risk and,?therefore?tend to weaken in comparison. As?at?this morning, in the interbank market, The US dollar is trading at $1.2435 against the pound, $1.0650 against the euro and is near?to?the top of its range against the Japanese yen at JPY 154.40.

UK retail sales stagnate in?March

It was reported?this morning that UK retail sales saw zero growth in?the month of?March, against the forecast of 0.3% growth, which brought the annual growth rate up to 0.8%. The?annual?figure was also a little shy of the market expectations. We will have features from Bank of England Monetary Policy Committee members today. It will be interesting to see whether stagnation on the High Street is swaying their thinking on potential interest rate cuts. The markets are pricing in a June rate cut of 25 basis points.?Events in the Middle East may change the thinking?on that?and?heightened tensions between Israel?in?Iran are certainly on the periphery of investor and trader vision. We have no further significant UK data today, so geopolitical risk is?the?only real talking point?at this stage. As?at?this morning,?in the interbank market, a pound?will buy $1.2435, EUR 1.1675, AUD 1.9380, NZD 2.1105 or CAD 1.7105.

Today's Major Economic Releases

06:00 EUR Producer Price Index

06:00 GBP Retail Sales ex-Fuel

14:15 GBP BoE's Ramsden speech?

14:30 USD Fed's Goolsbee speech?

Interbank Exchange Rates