PM under fire for weak Brexit plan
UK CBI industrial orders printed below expectations at -10 for May, down from -5 previously and the weakest figures since October 2016. Despite a net increase in output, the exports component also declined. On-going political concerns eroded Pound support and Dollar strength maintained the pressure with a dip to five-week lows below 1.2700 and the Euro peaked near 1.1375.
Prime Minister May secured Cabinet approval for a revised Brexit Withdrawal Agreement and speculation mounted that it would include a customs union or confirmatory referendum triggering a Pound spike to near 1.2800 against the Dollar. The Withdrawal Agreement detail revealed that if MPs passed it, they would get the chance to vote for a second referendum. Overall, the reaction was negative and as optimism dissipated, the Pound retreated sharply. Sterling opens near 1.2700 against the Dollar and 1.1368 on the Euro, ahead of this morning’s UK inflation data releases.
The US existing home sales data recorded a slight decline to an annual rate of 5.19mn for April from 5.21mn previously and also below consensus forecasts. The May Philadelphia Federal Reserve (Fed) non-manufacturing survey declined to 17.3 from 21.0 previously with a notable slowdown in orders growth while employment and price pressures remained firm. Companies were more optimistic over the outlook.
Boston Fed President Rosengren stated that he is not worried about undershooting the inflation target and was more hawkish than other committee members which provided an element of Dollar support.
Eurozone consumer confidence gave the single currency a small boost on Tuesday, strengthening for May and being the best number of 2019. UK PM Theresa May announcing her new Brexit deal also gave the Euro a small boost but ultimately this was short lived. The PMI data due out today will be of more significance and have a much bigger impact. Concerns over the Italian fiscal situation still persisted, as well as a widening US-German yield differential meaning the single currency struggled to gain any real momentum.
The European Central Bank’s (ECB) President Draghi gives a speech this morning following the non-monetary policy ECB meeting. The minutes from this meeting will also be of significance to traders so we can expect some volatility when they are released. The UK releases producer price index figures as well as consumer price index numbers which will create volatility. Later this morning the ECB’s Praet gives a speech which rounds off the data for the Eurozone today.
Data to watch:
01:30 JPY BoJ’s Harada speech
05:00 USD Fed’s Bullard speech
07:30 EUR ECB’s President speech
08:30 GBP Retail Price Index (YoY) (Apr)
08:30 GBP Retail Price Index (MoM) (Apr)
08:30 GBP Producer Price Index – Input (YoY) n.s.a (Apr)
08:30 GBP PPI Core Output (YoY) n.s.a (Apr)
08:30 GBP Consumer Price Index (YoY) (Apr)
08:30 GBP Consumer Price Index (MoM) (Apr)
08:30 GBP Core Consumer Price Index (YoY) (Apr)
08:30 GBP Public Sector Net Borrowing (Apr)
09:30 EUR ECB’s Praet speech
N/A EUR 10-year Bond Auction (Germany)
12:30 CAD Retail Sales ex Autos (MoM) (Mar)
12:30 CAD Retail Sales (MoM) (Mar)
18:00 USD FOMC Minutes
23:50 JPY Foreign Investment in Japan Stocks (May 17)