Can April figures inflate the Pound?
This morning heralds the first of the week’s UK data, of which the focus will be the CPI figures. Economic growth had gone limp just at the wrong moment, forcing the Bank of England (BoE) out of a widely-anticipated rate hike in May. Sterling has been punished heavily following the BoE’s dovish turn, and the drop to 2.5% in CPI in the March figures was a major contributor. Any deviation from 2.5% in the April figures will disrupt, and a solid increase will encourage the Sterling bulls to re-enter the fray.
The Dollar yesterday, in absence of substantial economic data, saw swings against both the Pound and Euro. The Dollar initially lost out to both as Cable pushed to weekly highs of 1.3486 and the Dollar reached 1.1826 against the Euro. With the opening of the New York trading session, however, the Dollar quickly recovered its losses and momentum carried on through.
In Donald Trump news, the US President made comments that one of his biggest self-proclaimed triumphs in a future meeting with North Korean leader Kim Jong Un, as planned on June 12th, was now unlikely. President Trump has also continued the feud with China over trade as he announced plans to impose severe penalties on ZTE Corp.
The Euro attempted a recovery from recent lows yesterday but quickly ran out of steam near the 1.1830 region, with Italian political developments keeping a lid on any meaningful upward movement. News reports that Paolo Savona, an 81-year-old economist and former minister with Euro-skeptic views, will be designated as Minister of the Economy and Finance prompted some fresh selling.
The weaker Euro tone extended this morning as traders looked forward to the release of flash Eurozone PMI prints for some immediate respite. The data added to recent signs of an economic slowdown and it will reinforce market expectations that the European Central Bank (ECB) will adopt a more cautious stance on monetary policy, hence we saw some fresh selling around the shared currency.
Data to Watch:
08:30 GER Markit PMI Composite (May)
08:30 GER Markit Services PMI (May)
08:30 GER Markit Manufacturing PMI (May)
09:00 EUR Markit PMI Composite (May)
09:00 EUR Markit Manufacturing PMI (May)
09:00 EUR Markit Services PMI (May)
09:00 AUD RBA’s Governor Philip Lowe Speech
09:30 GBP Retail Price Index (YoY) (Apr)
09:30 GBP Retail Price Index (MoM) (Apr)
09:30 GBP Producer Price Index – Input (MoM) n.s.a (Apr)
09:30 GBP Producer Price Index – Input (YoY) n.s.a (Apr)
09:30 GBP Consumer Price Index (YoY) (Apr)
09:30 GBP Core Consumer Price Index (YoY) (Apr)
09:30 GBP Consumer Price Index (MoM) (Apr)
14:45 USD Markit PMI Composite (May)
14:45 USD Markit Services PMI (May)
15:00 USD New Home Sales (MoM) (Apr)
19:00 USD FOMC Minutes
19:15 USD FOMC Member Kashkari Speech