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May’s date to be a date in May?

May’s date to be a date in May?

Last Friday saw UK services PMI move back up into expansionary territory with 50.4 in April, as forecasted. New business had dipped but stronger upward pressure on prices should put it back on track and business sentiment hit a twelve-month high. Both major political parties shed seats in the local elections with particularly heavy losses for the Conservatives, increasing domestic political pressures. The Pound rose sharply during the afternoon, moving from just below 1.3000 on the Dollar to hit four-week highs near 1.3170 and the Euro dipped to near one-month lows around 1.1765.

During the bank holiday Monday Sterling retreated with weaker risk appetite sapping support. The Euro climbed back to near 1.1700 and the Pound edged below 1.3100 against the Dollar before recovering. Markets will be monitoring domestic political developments with the Prime Minister’s position under intense pressure and calls for a firm date for departure.


The Dollar market is nervous after the menace of a trade war between the US and China resurfaced in a Twitter storm from the Tweetmaster in Chief. There were threats of increasing trade tariffs on goods tagged with “Made in China” labels. The US Dollar is keeping a short-lived positive tone against most major currencies as the market assess the latest twist in the negotiations.

Headline US employment data was well above expectations with an increase in April non-farm payrolls of 263,000 compared with consensus forecasts of around 180,000 and there was only a small downward revision to March’s data. Unemployment also declined to 3.6% from 3.8% and the lowest reading since 1969. Other elements were less positive, however, as the increase in average hourly earnings was held to 0.2% with the annual increase unchanged at 3.2%. There was also a decline in the participation rate and the household survey recorded a significant drop in the number employed.

The economic calendar is relatively light today with the Caixin China PMI pointed to weak growth in overall business activity, driven mainly by the services sector. The currency market is expected to tread the waters with caution. The Dollar gained only briefly before fading with the Euro strengthening towards 1.1200 from just below 1.1150.


Upbeat European data saw a positive day for the single currency on Friday, with significant improvement in retail sales (up 1.9% on the year on year rate for March) and the final PMI numbers were also revised higher for April. Investor confidence index rebounded in May which also meant that the market got behind the Euro. Add to the fact that the non-farm payrolls came in way above expectations and there was a positive feel to trading.

Data today sees German factory orders and then French imports/exports and trade balance. We then see house price data out of the UK before two speeches which round off the data – both are from Bank of England (BofE) members (Cunliffe and Haldane).


Data to watch

04:30 AUD RBA Interest Rate Decision (May 7)
06:00 EUR Factory Orders s.a. (MoM) (Mar) (Germany)
08:00 GBP BoE’s Cunliffe speech
N/A NZD GDT Price Index
14:00 CAD Ivey Purchasing Managers Index (Apr)
14:00 CAD Ivey Purchasing Managers Index s.a (Apr)
15:35 USD Fed’s Quarles speech
16:30 GBP BoE’s Haldane speech
23:01 GBP BRC Like-For-Like Retail Sales (YoY) (Apr)
23:50 JPY BoJ Monetary Policy Meeting Minutes 

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