Newsletter – 18th May 2017

Morning Bulletin

Yesterday

  • UK employment data took centre stage yesterday morning and all in all it was pretty solid if not slightly better than forecast, although it had little impact on Sterling in FX space:
    • Average Earnings Index 3m/y 2.4% as expected
    • Claimant Count Change 19.4K (33.5K Previous)
    • Unemployment Rate 4.6% (4.7% Exp)
  • That average earnings Index could be the key to any potential BOE rate hikes in the near future, as whilst inflation continues to outstrip wage growth the central bank will remain reluctant to act. You may well have heard the phrase ‘Brexit Squeeze’ thrown around in the media recently, and this is exactly what it refers to.
  • One currency Sterling did have some success against yesterday was the stuttering US Dollar, which has been hampered massively of late due to concerns and negative headlines around President Trump. GBP/USD once again yesterday made a charge for that elusive 1.3000 handle, and it got to within a whisker before once again dropping back to trade in the Mid 1.2900’s.
  • The Euro also continued to take advantage of the weak Dollar yesterday afternoon, surging to yet another 2017 high, this time to 1.1157.
  • Other data of note yesterday:
    • Eurozone Final CPI y/y 1.9% as expected
    • Canadian Manufacturing Sales m/m 1.0% (1.1% Exp)
Overnight

  • Much better than expected Employment data out of Australia overnight has the Aussie Dollar firmly on the front-foot in FX space this morning:
    • Employment Change 37.4K (4.5K Exp)
    • Unemployment Rate 5.7% (5.9% Exp)
  • There was also a solid GDP print out of Japan overnight, with 2017 1st Quarter growth at 0.5%, bettering the expected 0.4%. Year on Year growth stands at 2.2%.
  • UK ELECTION: Latest YouGov/Times Poll: Tories 45% (-1); Labour 32% (+2); Lib Dem 8% (-3).
Today
  • Key this morning will be UK Retail Sales at 9.30am. Having slumped in March, growth of 1.2% is forecast for April’s print.
  • US Unemployment Claims headlines this afternoon at 1.30pm, before ECB President Draghi closes the day’s proceedings, speaking at a University in Tel Aviv from 6pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1638 +0.15
GBP/USD 1.2964 -0.04
EUR/USD 1.1137 -0.19
AUD/USD 0.7441 +0.14

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Retail Sales m/m 1.2% -1.8%
13.30 CAD Foreign Securities Purchases 17.23Bn 38.84Bn
13.30 USD Unemployment Claims 240K 236K
13.30 USD Philly Fed Manufacturing Index 19.9 22.0
15.00 USD CB Leading Index m/m 0.4% 0.4%
18.00 EUR ECB President Drgahi Speaks