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Brits feeling poorer as inflation bites

Brits feeling poorer as inflation bites

GBP
On a very quiet trading day in Europe, the UK unemployment rate printed at 4.7%. This was despite the number of people unemployed falling by 45,000 to 1.56 million in the three months to February. Average earnings including bonuses printed at 2.3%, the same as Tuesday’s inflation reading. The average earnings without bonuses was only 2.2%, meaning wage growth is negated by inflation.

USD

From the US, the import price index dropped 0.3% while export price rose 0.2% on a monthly basis during March but provided little stimulus. Investors shied away from larger bets due to the ongoing geopolitical tensions surrounding North Korea and Syria.

A modest recovery in the US treasury bond yields, led by improving investors’ risk appetite, extended some immediate support and helped the Greenback reverse early losses. Cable pushed to just shy of 1.2520 but settled circa 1.2500, suggesting either a lack of volume or perhaps a retest today.

EUR

With just over a week to go until the first round of voting in the French Election, the race is getting more interesting. Far-Left candidate Melenchon is rising in the polls, while front-runner Macron’s support is dropping from last week’s high. Further signs that Le Pen and Melenchon are gaining in the polls could herald an immediate rise in French bond yields, a sell-off in the Euro and further weakness in French and European stock indices.

Renewed selling pressure on the Euro has been prompted by a number of factors: The uncertainty surrounding the upcoming French Presidential election, the accommodative European Central Bank (ECB) monetary policy stance, and comments by the International Monetary Fund’s (IMF’s) Christine Lagarde that the IMF is still debating on whether to give some lending to Greece.

Data to Watch:
7:00am EUR GER Consumer Price Index (YoY) (Mar), CPI (MoM) (Mar), Harmonised Index of Consumer Prices (YoY) (Mar), HIoCP (MoM) (Mar). 1:30pm USD Initial Jobless Claims (Apr 7).

2:30am AUD Employment Change s.a. (Mar), Unemployment Rate s.a. (Mar). 3:30pm CAD BoC Governor Poloz Speech.

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