Today is starting off with a risk-off tone though the pound is enjoying the current conditions. The UK GDP is up, the US dollar is weakening, and the FTSE is at near recent highs. UK homeowners will feel a bit richer today as their house prices have on average gone up, which is usually a good sign for consumer sentiment
The London session is starting off with a signal from the major forex pairs that today is a risk-off day. We have flows going from the commodity pairs into the havens of the yen, and Swiss franc. Japanese construction data came out before the European session started with a year-on-year drop of -2.3%m but with a YoY rise in housing starts. We also had news that there would be a collective oil release on Friday from countries with reserves, as announced by the IEA. President Biden could release an additional 1mln barrels every month from the US SPR. This has influenced the price of oil overnight and the drop could be adding to the bullish yen.
81% of the traders on the ActivTrader platform are bullish on the Brent oil contract. Though looking at a 15-minute chart the 200-period EMA is currently acting as good resistance and the momentum is in the red candles which are considerably bigger than the green candles. A close below the $103 would be a signal for traders to look for a bigger drop today. What may keep prices above that level of support is the lack of movement in the peace talk process and a possible shut of Russian gas and oil tomorrow.
Some Chinese manufacturing data came in during the Asia-Pac session and shows a contraction for the 3rd time over the last 12 months. The ongoing COVID infections and mandatory full lockdowns will be affecting the coming month's data too.
As traders digested the UK GDP revision, the pound opened higher in London. United Kingdom's Office for National Statistics (ONS) reported that gross domestic product (GDP) rose by 1.3% in the fourth quarter of the fiscal year 2021, little above expectations. GDP for the fourth trimester of 2019 was 0.1% below where it had been before the COVID-19 pandemic began. We also received the latest housing prices from the Nationwide House Price Index, which showed an increase of 1.1% month over month. “March saw a further acceleration in annual house price growth to 14.3%, the strongest pace of increase since November 2004. Prices rose by 1.1% month-on-month, after taking account of seasonal effects, the eighth consecutive monthly increase," stated Robert Gardner, chief economist at Nationwide.
The good UK data had a negative effect on the EURGBP cross but that was compounded by the news from Gazprom which is studying options of halting gas supplies to Europe amid issues of payments in roubles. German retail sales data came in above expectations YoY at 7.0% versus the expected 6.1%.
In this afternoons calendar, traders will be watching the Canadian GDP figure and also the latest Core PCE Price Index from the US