The preliminary reading of the UK Manufacturing Purchasing Managers index beat expectations as it rose to 60.7 for April, up from 58.9 previously and the strongest reading since 1994, although admittedly the data was boosted by supply-chain disruptions. The Services sector PMI strengthened to 60.1 from 56.3 previously, just beating expectations. With index data, any number above 50 indicates expansion and below means contraction. The Pound didn’t benefit from the data, partly due to market expectations that services data would have been more positive. Also, expectations that the Eurozone vaccine rollout and economic reopening would catch-up over the next few months constrained Sterling progress. Sterling was unable to push through the 1.3900 level against the Dollar and the Euro tested resistance below 1.1500.
Ben Broadbent, Bank of England Deputy Governor stated over the weekend that he expects very rapid UK growth over the next 6 months, but that inflation will be less predictable. The Pound opens close to 1.3900 this morning against a weaker Dollar but the Euro has strengthened to near 1.1480.
US bond yields were little changed in early Europe on Friday and the dollar was unable to make headway with a sharp retreat to near 107.50 just after the New York open. Wall Street equities moved higher and there was a sharp recovery into the London fix with the dollar strengthening.
The US PMI manufacturing index strengthened to a 2-month high of 60.6 for April from 59.1 previously and slightly above consensus forecasts. The services-sector index also posted a record high of 63.1 from 60.4 previously with strength in new orders and employment.
The data maintained confidence in the growth outlook, but the dollar was unable to respond.
The Dollar was unable to regain territory this morning amid expectations that the dovish Federal Reserve (Fed) policy would be maintained at this week’s policy meeting.
The Euro steps back to 1.2110, following its run-up to the highest levels in two months against the Dollar, as we begin Monday’s European session. The EU’s comparatively strong stand in Brexit joins faster vaccination-led economic recovery hopes to back positive sentiment. Though, today’s German IFO sentiment data for April will be the key to watch.
Data to watch
09:00 - EUR - German Ifo Business Climate
Posted in Daily Market News on Apr 26 2021