Wages outstrip inflation
UK unemployment fell to 4.2%, the lowest point since Jive Talkin’ was on the wireless (1975). Also in the docket was confirmation that the real wages are back in the black as average incomes including and excluding bonuses increased by 2.8% in the three months to February.
The Pound’s purple patch peaked at 1.4372 versus the Dollar and 1.1598 versus the Euro yesterday. Sterling had benefited largely from a lack of (negative) Brexit headlines and the economic slowdown not hitting as hard as some feared. On the Dollar side, the protectionist measures Mr Trump advocates have weighed on the Dollar.
That said, this morning’s UK March CPI inflation could upset the balance should it fail to meet expectations. A big inflation drop could see investors scale back expectations of Bank of England (BoE) tightening, and consequently the Pound suffering.
The US Dollar is trading generally higher, but that comes after a decent rebound from soft levels against the major currencies overnight. Housing data was generally positive with starts increasing 1.9% and building permits rising 2.5% in March.
Some market participants feel it is inevitable that the United States is about to face a shift to moderate growth as the economy returns to full employment and a significant deterioration in foreign trade due to the stimulation of demand at full employment.
Ahead in the day, the Federal Reserve (Fed) will publish its Beige Book, where a continuation of the moderate regional growth is expected. Further out, New York Fed governor W.Dudley will make opening remarks at the Community Bank Conference and will speak on Economic Outlook, seconded by Federal Open Market Committee’s R.Quarles.
German ZEW investors sentiment indicator dropped to -8.2 unexpectedly in April from 5.4 in March as current events in Syria and the continuing trade conflict weighs on sentiment. Further, Eurozone ZEW index of investors sentiment fell to 1.9 in April from 13.4 in March.
Recent reports from analysts at Danske Bank suggest the Euro is vulnerable to renewed weakness against the Dollar. Momentum has swung against the Euro as relative economic growth means momentum is now stronger on the other side of the Atlantic. Further, signs that Eurozone economic momentum is dwindling continues and the single currency may have peaked last year.
Today, Eurozone inflation is expected to remain tame and well below the 2% European Central Bank (ECB) inflation target in March.
Data to Watch:
24h EUR Eurogroup meeting
09:30 GBP Retail Price Index (YoY) (Mar)
09:30 GBP Retail Price Index (MoM) (Mar)
09:30 GBP Producer Price Index – Input (YoY) n.s.a (Mar)
09:30 GBP Producer Price Index – Input (MoM) n.s.a (Mar)
09:30 GBP Core Consumer Price Index (YoY) (Mar)
09:30 GBP Consumer Price Index (YoY) (Mar)
09:30 GBP Consumer Price Index (MoM) (Mar)
10:00 EUR Consumer Price Index (MoM) (Mar)
10:00 EUR Consumer Price Index – Core (YoY) (Mar)
10:00 EUR Consumer Price Index – Core (MoM) (Mar)
10:00 EUR Consumer Price Index (YoY) (Mar)
13:30 USD Fed’s William Dudley speech
15:00 CAD Bank of Canada Monetary Policy Report
15:00 CAD BoC Interest Rate Decision
15:00 CAD BoC Rate Statement
16:15 CAD BoC Press Conference
19:00 USD Fed’s Beige Book
20:15 USD Fed’s William Dudley speech
21:15 USD Fed’s Quarles speech
23:45 NZD Consumer Price Index (QoQ) (Q1)