Newsletter – 3rd May 2017

Morning Bulletin


  • The biggest surprise during yesterday’s session was the blowout UK Manufacturing PMI print released in the morning. Expecting a reading of 54.0, the actual print of57.3 was the highest since July 2014 and underpinned Sterling strength for the remainder of the day.
  • Having slipped below the 1.2900 handle against the US Dollar early on, the release of the PMI print quickly pushed Sterling back into the 1.2900 area before hitting a day’s high of 1.2939.
  • The only other key data released yesterday was the New Zealand Global Dairy Trade Price Index, and the reading showed growth for a 3rd consecutive time. The print of 3.6%gave the Kiwi Dollar some welcome respite in FX space. Dairy prices can have a massive impact on the NZ economy as the sector generates upwards of 7% of the country’s GDP.
  • FRENCH ELECTIONS: The latest polls continue to give Macron a comfortable lead:
    • BVA-Salesforce Poll: Macron 60% v Le Pen 40%
    • IFOP Poll : Macron 59.5% v Le Pen 40.5%
    • Elabe Poll : Macron 59% v Le Pen 41%
  • Speaking yesterday Marine Le Pen said that the Euro was a drag on the French economy, and if elected she would push for EU reforms immediately and would want to see the Fran replacing the Euro within two years.

  • Very impressive Employment data out of New Zealand overnight:
    • Employment Change q/q 1.2% (0.8% Exp)
    • Unemployment Rate 4.9% (5.1% Exp)
  • UK BRC Shop Price Index down –0.5% y/y in April as expected.
  • Reports this morning that the UK’s EU divorce bill could now stand at €100Billion, up significantly from the already disputed €60 billion that was being thrown around. Unsurprisingly UK Brexit Minister David Davis has already stated the UK would pay what was legally due and “not just what the EU wants”.
  • Sterling was slightly on the back-foot this morning following these reports, however it has currently clawed back most of that ground vs. the US Dollar and Euro.

  • Key data this morning comes in the form of UK Construction PMI (52.1 Exp) and Eurozone GDP reading (0.5% Exp).
  • This afternoon US Employment headlines at 1.15pm followed by US Manufacturing data at 3pm.
  • The main event comes later this evening, around 7pm with the US Fed FOMC rate decision and accompanying statement. Whilst the Fed is expected to leave rates at or around 1%, markets will be looking for signals for a potential hike in the June meeting.
  • Worth noting it is a Japanese bank holiday for the remainder of the week – Golden Week Holiday


Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1841 +0.08
GBP/USD 1.2931 -0.05
EUR/USD 1.0919 -0.11
AUD/USD 0.7486 -0.63


Time (GMT) Region Data Release Forecast Previous
08.55 EUR German Unemployment Change -10K -30K
09.30 GBP Construction PMI 52.1 52.2
10.00 EUR Prelim Flash GDP q/q 0.5% 0.4%
13.15 USD ADP Non-Farm Employment Change 178K 263K
15.00 USD ISM Non-Manufacturing PMI 56.1 55.2
19.00 USD US Federal Funds Rate <1.00% <1.00%
19.00 USD US Fed’s FOMC Statement