Newsletter – 23rd May 2017

Morning Bulletin

Yesterday

  • With no economic data of any significance released yesterday attention fell to political and economic speakers on the wires throughout the day.
  • German Chancellor Merkel’s comments arguably had the biggest impact yesterday, as the Chancellor suggested the Euro was too weak due to ECB monetary policy. Highlighting that the weaker Euro was the driver behind the relatively high German trading Surplus, as their goods and services remain relatively cheaper to the world.
  • Chancellor Merkel’s comments gave an already advancing Euro further impetus in FX space, with the single currency pushing close to a 1 month low of 1.1556 against Sterling, whilst against the US Dollar it hit further fresh 2017 highs of 1.1263.
  • UK ELECTIONS:
    • ICM/Guardian Poll: Tories 47% (-1); Labour 33% (+5)
    • In Wales, YOUGOV Poll: Labour 44% (+9); Tories 34% (-7); Plaid 9% (-2)
  • BREXIT: Yesterday EU ministers unanimously gave Michel Barnier the green light to commence Brexit talks with the UK. EU Brexit Negotiator Barnier said he expected talks to begin on Monday 19th June, stating that the sooner key issues surrounding the withdrawal were agreed, the sooner talks on a future trade deal could get underway.
  • Hawkish commentary from US Fed Member Kaplan yesterday evening, with the Dallas Fed President backing the view that the Fed should hike rates two more times this year. Kaplan said he has no concerns about the strength of the economy or the outlook for inflation.
Overnight

  • It goes without saying that the movements of currencies fall into total insignificance given the atrocity that took place in Manchester overnight. Police confirmed 22 people have been killed, with a further 59 injured in a suspected suicide attack following a pop concert. Our thoughts go out to the families and friends of those involved.
  • Having already been on the back-foot yesterday, naturally Sterling has fallen a little further this morning following the events of last night.
  • The US Dollar is slightly on the defensive this morning following what has been described as a less than impressive budget release overnight. Trump’s first budget seeks some $3.6 Billion in cuts over the next 10 years, reducing the government’s role in society.
  • Japan Flash Manufacturing PMI 52.0 (52.9 Exp)
  • Japan All Industries Activity m/m -0.6% (-0.4% Exp)
  • French Flash Manufacturing PMI 54.0 (55.2 Exp)
  • French Flash Services PMI 58.0 (56.8 Exp)
Today
  • Plenty of key Eurozone and UK economic data to digest this morning.
  • Arguably German IFO Business Climate (9.00am) and UK Public Net Sector Borrowing (09.30am) will garner the most attention.
  • There is raft or more low to medium impact data out of the US this afternoon.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1535 -0.28
GBP/USD 1.2989 -0.07
EUR/USD 1.1256 +0.18
AUD/USD 0.7491 +0.21

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR German IFO Business Climate 113.1 112.9
09.00 EUR Eurozone Flash Manufacturing PMI 56.5 56.7
09.00 EUR Eurozone Flash Services PMI 56.5 56.4
09.30 GBP Public Net Sector Borrowing 8.0Bn 4.4Bn
11.00 GBP CBI Realised Sales 12 38
13.30 CAD Wholesale Sales m/m 1.1% -0.2%
14.00 USD US Fed Member Kashkari Speaks
15.00 USD New Home Sales 611K 621K
15.00 USD Richmond Manufacturing Index 15       20