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Can we post-date that P45?

Can we post-date that P45?

The Pound had another difficult mornings trading, ceding ground on reports that Brexit talks between the government and the Labour Party were close to collapse. Fragile global risk conditions and concerns over the international growth environment also contributed to negative Sterling sentiment. Current Prime Minister, Theresa May, declined to set a definitive date for stepping down and expressed hope that the Withdrawal Deal would be passed ahead of the European Elections. The markets were less confident a breakthrough was imminent which undermined confidence and presented little reason to buy the Pound.

Sterling broke just below the 1.3000 mark against the Dollar before settling in the vicinity and the Euro peaked at 1.1600 before correcting to settle around 1.1630. The RICS house-price balance held at -23 in April as caution prevailed with little evidence housing sentiment recovering.


Early signs appeared that trade tensions are hampering Dollar sentiment as the market speculated economic harm from increased tariffs would increase pressure for the Federal Reserve to cut interest rates. However, with little to cheer about amongst its peers Dollar selling was modest and trading ranges were relatively narrow as caution. The Euro failed to muster a convincing break above 1.1200 and retreated after the European market closed. The market focus is currently centered on trade, and despite the Dollar being little changed from yesterday the markets are expecting volatility around the release of trade, jobless and Producer Price Index data this afternoon.


Stronger than expected German industrial production data did not boost the Euro mainly due to nervousness over the Italian budget. Yields remained very low and European Central Bank (ECB) President Draghi stated that there was upward pressure building on nominal wages. He also mentioned the bank cannot give up the fight against inflation. Markets remained very much focused on the US/China trade talks which hampered the Dollar.

Virtually no data is due out today, with the only two pieces of data being the UK RICS housing price balance for April and Spanish industrial output. There are also Spanish bond data but realistically not much volatility is expected from the data. As alluded to above, the trade talks will be of most interest.


Data to watch

01:30 CNY Consumer Price Index (MoM) (Apr)
01:30 CNY Producer Price Index (YoY) (Apr)
01:30 CNY Consumer Price Index (YoY) (Apr)
12:30 USD Producer Price Index ex Food & Energy (YoY) (Apr)
12:30 USD Trade Balance (Mar)
12:30 USD Continuing Jobless Claims (Apr 26)
12:30 USD Initial Jobless Claims (May 3)
12:30 USD Fed’s Chair Powell speech
13:45 USD Fed’s Bostic speech
22:45 NZD Electronic Card Retail Sales (MoM) (Apr)
23:30 JPY Overall Household Spending (YoY) (Mar)
23:50 JPY Foreign Investment in Japan Stocks (Apr 26)

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