Newsletter – 1st June 2017

Morning Bulletin

Yesterday

  • Sterling started yesterday morning’s session firmly on the back-foot following a shock YouGov poll which projected the Tories would fall 16 seats short of a majority, with Labour gaining some 30 extra seats in the process. The Pound did however start to make a small recovery by midday.
  • The initial poor start was not aided by the UK ‘Net Lending to Individuals m/m’ print which fell to 4.3 Bn. That was the lowest level of lending since August 2016, and fell below the expected 4.5Bn.
  • Also a slight shock yesterday morning with the headline Eurozone inflation print falling to its lowest level this year. The CPI y/y figure fell to 1.4%, slightly less than the expected 1.5% but far below April’s 1.9%. It will be interesting to see how this progresses going forward as ECB President Draghi has repeatedly mentioned his concerns about subdued underlying inflation.
  • German Retail Sales m/m saw a slump for the month of April with a decline of -0.2% reported against an expected rise of 0.4%.
  • Sterling did have a late rally yesterday afternoon following the release of a Kantar election poll. The Poll put the Tories on 43%, some 10pts ahead of Labour on 33%. As a result GBP/EUR rallied to a day’s high of 1.1489, whilst GBP/USD similarly rallied to a day’s high of 1.2920.
  • According to a White House Official, President Trump is prepared and expected to withdraw the United States from the Paris climate accord. A move that will no doubt trouble and frustrate global leaders.
  • Solid data release from North America yesterday afternoon:
    • Canadian GDP m/m 0.5% (0.3% Exp)
    • US Chicago PMI 59.4 (57.0 Exp)
Overnight

  • Despite that positive afternoon session for Sterling yesterday, the pound has once again weakened off overnight, this time the move was triggered shortly after the live TV ‘Leaders’ debate. PM May’s decision not to take part no doubt not helping to project an image of strong and stable leadership.
  • UK ELECTION: Latest YouGov/Times Poll: Tories 42% vs Labour 39%.
  • There was some encouraging data out of Australia overnight, however the Aussie Dollar remained largely unmoved in FX space, potentially due to the weak Chinese Manufacturing print:
    • Australia Private Capital Expenditure q/q 0.3%(0.4% Exp)
    • Australia Retail Sales m/m 1.0% (0.3% Exp)
    • China Caixin Manufacturing PMI 49.6 (50.2 Exp)
Today
  • UK Manufacturing PMI is our key print this morning at 9.30am with a reading of 56.5 forecast.
  • This afternoon we look to a number of high impact US figures, kicking off at 1.15pm with ADP Non-Farm employment Change data.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1452 +0.02
GBP/USD 1.2866 -0.19
EUR/USD 1.1234 -0.07
AUD/USD 0.7415 -0.19

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Eurozone Final Manufacturing PMI 57.0 57.0
09.30 GBP Manufacturing PMI 56.5 57.3
12.30 USD Challenger Job Cuts y/y -42.9%
13.15 USD ADP Non-Farm Employment Change 181K 177K
13.30 USD Unemployment Claims 239K 234K
13.30 USD Revised Non-Farm Productivity q/q -0.6% -0.6%
15.00 USD ISM Manufacturing PMI 54.7% 54.8%