The British pound has started the day strong as Cable opens the London session above Wednesdays high though the support from the 5th of March swings low is acting as resistance currently capping further gains. If the pound can start trading inside the March range again and we see acceptance of these prices, the liquidity resting above the top of the range around 1.4000 will be a great target. The bullish move happened from around yesterday’s US equities open as the US dollar gave back some gains, but this morning’s UK data is adding to the bullish momentum.
Retail sales in the UK jumped 2.1% month-on-month in February though there is still a long way to unwind the 8.2% drop in January. Home improvement and outdoor furniture ahead of the relaxation of coronavirus restrictions have been attributed to the good data and as Spring approaches and hopefully the warmer weather arrives, things could be looking up for the retail sector as a whole.
European bourses are trading higher today, as bullish sentiment grows following yesterday’s bounce in US equities. The Dax is already up 0.85% and the UK FTSE 100 is in the green for the week. Traders are viewing the recent comments out of the Central Banks as being positive and there has been an increase in capital flows as stimulus cheques arrive. There is still the persistent worry that Europe may suffer due to the restrictions on movement, as French President Emmanuel Macron hinted restrictions aimed at limiting the spread of the coronavirus in the country might follow in the "days and weeks."
Crude futures rose on Friday as supply tightens but also as the Suez Canal blockage continued disrupting trade routes. Supply chains were already on the back foot following the covid-19 restrictions, so anything that adds friction to these supply chains is going to be problematic. A salvage company warned it could take weeks to remove the vessel. The ActivTrader sentiment tool is showing that traders are 76% bullish while the weekly candle is still bearish. Natural gas is up 10% for the week and is currently up 2% on the day making it the stand-out performer in the commodities complex.
This afternoon attention turns to the US Core PCE Index which is expected to come in at 1.5% and unchanged from the previous readings. The Personal Consumption Expenditures price index excludes food and energy making it easier to see the underlying inflationary trends. It is also the Fed’s preferred metric when considering inflationary pressures and monetary policy, making it a Tier 1 data point for traders and investors.