Global market watch - 13th April 2021

The dollar was on the backfoot after Fed Chair Powell’s earlier comments, and GBP/USD had managed to stay above 1.3670. We have just had the release of UK GDP and trade data as well as industrial and manufacturing production, GDP growth for February was 0.4% so slightly below the 0.5% suggested. The goods trade deficit grew to £16.4 billion and was worse than the £10.4 billion forecasted. Industrial production doubled its expected result and manufacturing production did even better, rising 1.3% rather than the 0.5% proposed. Some analysts are suggesting that the poor trade data has been exaggerated because of pre-Brexit stockpiling; we suspect, however, this not to be the case. The market is also very aware of the release of important CPI this afternoon, so the pounds reaction to the UK data has been muted so far.
EUR/USD slowly pushed higher again on very little news. Retail sales were a positive 3% gain, which were much better than the expected 1.3% increase. ZEW economic sentiment will be released today and will hopefully provide direction.
Fed Chair Powell continued his supportive message for the US economy, and his thoughts that US GDP growth could be 6.5% this year coincide with the IMF’s positive appraisal of the United States strongly emerging from the pandemic. CPI is expected to be 0.5% when it is released today, but we consider an upward surprise would be in order as the stimulus packages are due to work their way through the system. Yesterday, Fed St Louis President Bullard tied monetary policy changes directly to vaccination success rates.
Business confidence was 15, so below last month’s reading of 18. This hasn’t been able to cause any great AUD volatility.

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