PM survives with right to refuse clause
Headline average earnings growth (including bonus) eased to 2.8% in the three months to April against expectations of 2.9%. Underlying earnings (excluding bonus) were unchanged at 2.5%. Unemployment held at 4.2% (a 42-year low) and there was a significant decline in the claimant count. Further, the employment increase of 146,000 in the three-month period beat forecasts. The data had little impact on interest rate expectations, but markets are more sceptical of an August move.
The EU Withdrawal Bill was debated in the Commons and Sterling lost ground amid speculation the government would be defeated. Just ahead of voting, reports of concessions to appease rebels pushed Sterling sharply higher. The government did win the votes, easing immediate fears, although there were also concerns that Theresa May’s position remained extremely weak amid underlying divisions. The Euro retreated to lows near 1.1400, although the Pound failed to hold above 1.3400 against a firm Dollar with little change on Wednesday ahead of the latest inflation data.
The US Dollar is trading flat against the basket of major currencies this morning. The handshake impact between Trump and Kim seems to fade away as investors were left with little information to chew on. US inflation data came in line with expectations.
US consumer prices increased 0.2% for May, compared with consensus forecasts of 0.1%, with the annual increase at 2.8% from 2.5% previously and the highest rate since February 2012. The Federal Reserve starts its two-day meeting with a 25-basis rate hike on the cards tomorrow.
German ZEW investor confidence for June declined to -16.1 from -8.2 previously, below forecasts and the lowest reading since November 2012. Eurozone investor confidence also declined to 23-month lows, maintaining unease surrounding the Eurozone growth outlook and triggering fresh doubts surrounding European Central Bank (ECB) normalisation plans.
The Euro, overall, was unable to make any headway and retreated to lows below 1.1750 late in the European session and drifted lower on Wednesday.
Data to watch:
03:00 AUD RBA’s Governor Philip Lowe Speech
08:15 CHF Industrial Production (QoQ) (Q4)
08:15 CHF Industrial Production (YoY) (Q4)
09:30 GBP Retail Price Index (YoY) (May)
09:30 GBP Retail Price Index (MoM) (May)
09:30 GBP Producer Price Index – Input (MoM) n.s.a (May)
09:30 GBP Producer Price Index – Input (YoY) n.s.a (May)
09:30 GBP Consumer Price Index (YoY) (May)
09:30 GBP Core Consumer Price Index (YoY) (May)
09:30 GBP Consumer Price Index (MoM) (May)
10:00 EUR Industrial Production s.a. (MoM) (Apr)
n/a EUR 10-y Bond Auction
13:30 USD Producer Price Index ex Food & Energy (YoY) (May)
19:00 USD FOMC Economic Projections
19:00 USD Fed’s Powell Speech
19:00 USD Fed’s Monetary Policy Statement
19:00 USD Fed Interest Rate Decision
19:30 USD FOMC Press conference