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Market Report 16th May 2016

CURRENCY SNAPSHOT

EUR: Inflation will be key this week, though today is a bank holiday across some of Europe.
USD: The Fed will be in the limelight this week, with speeches from three officials and the Fed minutes. Markets will be looking for any guidance on timing of the next rate hike.
GBP: Inflation, retail sales and jobless will be in focus this week.

ROUNDUP

From the UK the trade balance reading was strong on Tuesday showing that UK trade outside of Europe is increasing and showing good growth. Though on Wednesday industrial and manufacturing production data disappointed with figures that technically took the industrial sector back in recession. This pressured the pound until Thursday when it found support after the Bank of England left the benchmark interest rate and level of QE unchanged, but warned that a Brexit would cause a “material slowing in growth, a notable rise in inflation”

In Australia, inflation expectations declined to the lowest level in eight months in May, with weak first-quarter consumer price data having a negative effect on expectations.

In the US, the number of job openings for March came out better than expected along with better Retail sales, which saw the strongest monthly increase since February 2014.

On Saturday Moody's upgraded the sovereign rating on Ireland and kept the rating outlook ‘positive’. The upgrade is due to 'a stronger economic recovery and a more marked reduction in the public debt ratio.

COMING UP

Inflation data is due on Tuesday with expectations for an increase from the previous month, which could support the dollar. We have a few Fed Speeches this week and the Fed minutes will be released on Wednesday, when the market will look for any further forward guidance on a potential interest rate hike in June.

Inflation data for April will be released this Tuesday. Wednesday is jobs day in the UK with unemployment, average earnings and claimant count to be released. Anything better than the 5.1% unemployment figure will surprise to the upside, with focus on the average earnings.

Today some of the Eurozone will be observing the Whit Monday public holiday. Inflation data will be released on Wednesday also the ECB will have a non-policy meeting on Wednesday and release accounts on Thursday, though no change is expected.

The minutes from May’s meeting will be released in the early hours of Tuesday morning and Wednesday will bring the unemployment rate for April.

Bank of Canada will release its quarterly review on Monday, featuring articles related to the Canadian economy and to central banking. Canadian inflation and retail sales are due on Friday.

Monday 16 May 2016, 10:13am

Market Report 9th May 2016

CURRENCY SNAPSHOT

GBP – Little data this week suggests a relatively quiet week.
USD – Much the same as the pound, not much is expected until later in the week.
EUR – Looks fairly quiet as the only piece of data will be the budget statement.

ROUNDUP

Last week started with the UK offline due to the bank holiday and unsurprisingly the pound lost a little ground against the euro and dollar which became the trend for most of the week.

PMI figures from across Europe disappointed on Monday which were overlooked due to low ISM figures from the US. The big news on Tuesday was of course Australia cutting interest rates. Manufacturing PMI from the UK followed and slipped to the lowest in three years, causing the pound to drop.

Construction PMI for Europe and the U.K. both disappointed in Wednesday as did retails sales for Europe. ADP employment change, the precursor to non farm payrolls on Friday came out and showed a sharp drop in employment change but had little affect on the dollar.

Thursday was very quiet which turned everybody's attention to non-farm payroll figures from the US which came out much lower than expected, the unemployment rate however, remained.

COMING UP

Inflation figures are expected on Tuesday which are expected to improve slightly.

A very quiet week for the UK barring "Super Thursday". There is no expectation of any change but the language used may be key in indicating the BoE's next move.

The highlight of the week will be the monthly budget statement on Wednesday.

An even quieter week for Europe with the only top tier data coming from Germany on Friday which is their CPI figure, a consensus is yet to be given.


Monday 09 May 2016, 11:20am

Market Report 5th May 2016

CURRENCY SNAPSHOT

GBP- UK construction industry posts worst result since June 2013
EUR- European services sector growth slows in April
USD- US Dollar movements sensitive to speeches by US financial officials

ROUNDUP

Yesterday morning saw a raft of European data miss expectations for April but it did little to move the rates significantly. In a round up of service sector growth, only Italy improved on the previous month and was joined solely by Spain in beating expectations. The Eurozone’s retail sales data for March showed a slowdown and a reduction compared to the month prior.

The UK’s construction industry also showed a slowdown in April, falling to the lowest level of growth since June 2013. This follows the poor manufacturing data from Tuesday and adds weight to the argument that the UK economy is stalling ahead of the EU Referendum.

In the afternoon, employment figures for the US fell significantly below expectations and lower than the previous reading. However, positive services sector data and suggestions of a Fed interest rate rise in June from a number of prominent officials helped the US Dollar to remain steady against the Pound.

COMING UP

The afternoon is fairly quiet with only the weekly jobless claims from the US being released. This afternoon and evening will see numerous US financial officials speaking which could boost the Dollar overnight depending on their tone.

The Chinese services sector softened in April although this has not had the effect on the commodity currencies that it usually causes.

Overnight, Australia released several pieces of positive data which helped the Australian Dollar to regain some ground against Sterling after recent losses. Retail sales beat expectations, while home sales as well trade balance results all improved. The Aussie Dollar could continue to gain off the back of this.

Thursday 05 May 2016, 10:17am

Darren Kilner

Darren Kilner

Head Of FX & Dealing

Email Darren

Call us on 020 7778 9350