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Manufacturing data set to disappoint

Manufacturing data set to disappoint

Sterling struggled beneath the rain clouds of Friday’s poor GDP results and futures markets indicated a 20% chance of a Bank of England rate increase in May. The Pound dipped sharply to lows near 1.3715 against the Dollar and the Euro strengthened to highs around 1.1330. There was a tentative recovery late in European trading as the recent slump of nearly 5% against the Dollar triggered some bargain-hunting. Month-end pressures also eased and the Euro was unable to hold below 1.1360.

This week’s PMI data releases will be especially important given the poor data showing last month. Sterling consolidated around 1.3750 against the Dollar on Tuesday with Brexit uncertainty continuing to spoil the party.


The US Dollar is near a three-month high versus the Euro and rose to a three-month high versus the Pound as investors continue to adjust their bets on the Greenback weakening. Against a basket of currencies, it is now at a key level that could determine whether it simply gives back the ground it has made over the past month, or whether it can head higher. This week we have the Federal Reserve’s (Fed) interest rate meeting as well as the April employment report.

US consumer prices accelerated this year to March, with the Federal Reserve’s preferred inflationary measure (core PCE price index) surging to 1.9%, just shy of their 2% target. The data when coupled with other inflationary releases should support the Fed’s plans to continue tightening monetary policy when they meet this week.


The German harmonized CPI basis dropped to 1.4% from 1.5% this time last year in April whilst inflation remained unchanged at 1.6%. German retail sales decreased by 0.6% m/m for March but rose 1.3% over the year.

For the Eurozone data, money supply growth fell 0.5% to 3.7% in the year to March which disappointed expectations of 4.1%, although a slight increase in private-lending growth was noted. This continues to remain an area of concern for the European Central Bank (ECB).

Further, US President Donald Trump yesterday decided to push back the possibility of a trade war with Europe as a decision on imposing steel and aluminium tariffs on American allies will be delayed by 30 days. Recently, Trump has placed a global 25% tariff on steel imports alongside a 10% tariff on aluminium.

Data to Watch:

05:30 AUD RBA Rate Statement
05:30 AUD RBA Interest Rate Decision
09:30 GBP Markit Manufacturing PMI (Apr)
09:30 GBP Mortgage Approvals (Mar)
15:00 USD ISM Manufacturing PMI (Apr)
15:00 USD ISM Prices Paid (Apr)
19:30 CAD BoC Governor Poloz Speech
23:45 NZD Unemployment Rate (Q1)
23:45 NZD Employment Change (Q1)

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