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A little less conversation, a little more action!

A little less conversation, a little more action!

The UK’s Q1 GDP growth printed inline with forecasts at 0.5% as inventory building continued to provide strong support. Industrial and manufacturing production data beat forecasts with annual increases 1.3% and 2.6% respectively and total business investment posted a 0.5% increase for the quarter. Sterling failed to muster significant support from the data as global factors dominated attention. Concerns increased that international trade tensions would undermine global growth and spill over the sap UK growth. The Pound drifted lower and failed to gain much support even when global risk appetite improved, falling back to the 1.3000 area on the Dollar and around 1.1570 against the Euro.

The weekend saw increased pressure on Theresa May to ends talks with the Labour Party and increased calls for more indicative votes. Globally, markets have a risk-averse tone this morning but the Pound is currently resilient. Labour Party Brexit talks will resume and developments in either direction will be key.


US consumer prices increased 0.3% for April, below consensus forecasts of 0.4% with the year-on-year increase held to 2.0% from 1.9% previously. Underlying prices rose 0.1% for the second successive month with a slight increase in the annual rate to 2.1% from 2.0%. The inflation rate was curbed by a small decline in food prices and a dip in apparel costs.

The benign data maintained speculation that the Federal Reserve (Fed) had scope to cut interest rates if the economic performance deteriorates. The US currency registered net losses with a recovery in commodity-currency sentiment while the Euro again pushed to the 1.1250 against the Dollar before fading slightly as longer-term sentiment remained subdued.


Friday saw the Euro somewhat protected by the escalation in the trade war between Trump and China which diverted a lot of attention away from Europe. The consensus view is that any further escalation would damage the US economy and increase the likelihood of a Fed rate cut later this year. German yields traded slightly higher, turning around earlier losses and European Central Bank (ECB) member Hansson maintained his hawkish stance. He commented that there was no urgency for the bank to review its policy.

From an economic data perspective, there is nothing that will be of interest to the Euro. As per usual Brexit news will have an effect, (if there is any news), and as the week progresses we will have more significant data releases.


Data to watch

01:30 AUD Investment Lending for Homes (Mar)
01:30 AUD Home Loans (Mar)
05:00 JPY Leading Economic Index (Mar)
07:00 AUD RBA’s Debelle speech
13:10 USD Fed’s Rosengren speech
13:10 USD Fed’s Clarida speech
21:30 CAD BoC’s Lane Speech


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