Newsletter – 15th May 2017

Morning Bulletin

Friday

  • Sterling was one of Friday’s underperformers, albeit losses were limited over the course of the day following a sharper decline in the morning’s trading. Arguably the weakness was attributable to the previous day’s disappointing Manufacturing data and Bank of England’s meeting.
  • The Euro was one of the few currencies that really did get the better of the Pound on the day, with the pair opening the day around 1.1835 before closing down at 1.1786.
  • Prior to Friday afternoon many felt a US rate hike was virtually nailed on in the US Fed’s June meeting, however weaker than expected inflation and retail sales data may have thrown a bit of a spanner in the works.
  • The Consumer Price Index (CPI) print m/m came in at 0.2%, just shy of the 0.3% forecast. Meanwhile Retail Sales for the month of April hit 0.4%, again short of the expected 0.6%.
  • Speaking shortly after this data we heard from US Fed member Evans, and much like many of his counterparts Mr Evans was particularly bullish about the US economy, stating he would be comfortable with one or two more rate increases this year.
  • Striking a very similar tone to his colleague Evan’s Friday evening, US Fed Member Harker said there was little slack left in the US Labour market and inflation was on track to stabilise at 2.0%, therefore a further two rate hikes in 2017 would be appropriate policy.
Over The Weekend

  • There was a real boost for German Chancellor Merkel over the weekend as her conservative (Christian Democrats) party comfortably won a key state election. Merkel’s CDU party picked up some 33% of the votes in the state of North Rhine-Westphalia, up from the 26.3% in 2012. Chancellor Merkel will of course be running for a fourth term on 24thSeptember.
  • Kiwi economic data continues to impress: New Zealand Retail Sales q/q 1.5% (1.1% Exp)
  • Japan PPI y/y 2.1% (1.8% Exp)
  • Japan Prelim Machine Tool Orders y/y 34.7% (22.8% Previously)
  • China Industrial Production y/y 6.5% (7.0% Exp)
  • Swiss PPI m/m -0.2% (0.0% Exp)
Today

  • Very quiet day in prospect with no high impact data due for release.
  • Worth noting that UK PM May will be participating in a live Q&A session later this evening.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1815 +0.24
GBP/USD 1.2925 +0.34
EUR/USD 1.0940 +0.08
AUD/USD 0.7421 +0.49

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Italian CPI m/m 0.3% 0.3%
09.30 EUR Portugal GDP q/q 0.6%
13.30 USD Empire State Manufacturing Index 7.2 5.2
15.00 USD NAHB Hosuing Market Index 68 68
20.00 GBP UK PM Theresa May Speaks