Newsletter – 3rd May 2018

Morning Bulletin

Yesterday

  • There was some welcome respite for the Pound in FX space yesterday morning. That came following the better than expected UK Construction PMI print of 52.5. Having slumped into contraction during March, April’s figure showed a solid rebound back into expansionary territory and comfortably bettered the expected 50.5.
  • That did give Sterling a brief lift during the morning but it was to be short lived as the Pound closed the day ever so slightly down against most of it’s major counterparts.
  • The Euro was also one of the weaker performers in FX space yesterday despite a raft of economic data largely coming back in-line with expectations:
    • Eurozone Prelim Flash GDP q/q 0.4% as expected
    • Eurozone Unemployment Rate 8.5% as expected
    • Eurozone Final Manufacturing PMI 56.2 (56.0 Exp)
  • US ADP Non-Farm Employment Change 204K (200K Exp)
  • Yesterday afternoon the European Union unveiled their plans for a bigger 1.279 Trillion Euro budget for the 7 years following the departure of the UK from the EU. The plan includes a controversial move to cut funding to member states that fail to respect the rule of law, and to ‘suspend, reduce or restrict’ access to errant states.
  • According to ECB Member Jens Weidmann expectations of an ECB rate hike in Mid-2019 still seems realistic.
Overnight

  • The US Federal Reserve opted to hold interest rates at<1.75% yesterday evening as widely expected. With just some minor tweaks on their comments around inflation and the economy the Fed’s policymakers left markets and investors frustrated, with no clear indication or signal as to whether they will hike rates two or three more times this year.
  • According to reports a UK Government cabinet meeting, featuring the newly appointed Home Secretary Sajid Javid, ended without agreement on the customs agreement they want with the EU Post-Brexit.
  • Australia Trade Balance 1.53Bn (0.68Bn Exp)
  • Australia Building Approvals m/m 2.6% (1.1% Exp)
Today
  • This morning UK Services PMI (9.30) and Eurozone CPI (10.00) will be in focus, with each release likely to dictate how their respective currency will fair over the course of the day’s trading.
  • There is plenty of key data out of North America as well this afternoon, kicking off with Canadian Trade Balance at 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1342 -0.09
GBP/USD 1.3618 +0.34
EUR/USD 1.2002 +0.44
AUD/USD 0.7526 +0.44

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Services PMI 53.5 51.7
10.00 EUR Eurozone CPI Flash Estimate y/y 1.3% 1.3%
10.00 EUR PPI m/m 0.1% 0.1%
13.30 CAD Trade Balance -2.3Bn -2.7Bn
13.30 USD Unemployment Claims 225K 209K
13.30 USD Trade Balance -50.0Bn -57.6Bn
15.00 USD ISM Non-Manufacturing PMI 58.1 58.8
15.00 USD Factory Orders m/m 1.3% 1.2%
17.00 CHF SNB Chairman Jordan Speaks