- 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|
|Time (GMT)||Region||Data Release||Forecast||Previous|
|08.55||EUR||German Unemployment Change||-10K||-30K|
|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|