Newsletter – 3rd May 2019

Morning Bulletin

Yesterday

  • There was a welcome return to expansionary territory for the UK’s Construction sector in April according to the PMI reading yesterday morning. The reading of 50.5 saw the industry back in growth following two months of decline. The survey revealed residential work had expanded at its fastest rate in four months, however civil engineering and commercial activity fell again.
  • Eurozone Final Manufacturing PMI 47.9 (47.8 Exp)
  • The Bank of England took centre stage yesterday afternoon with their monetary policy meeting and inflation report. As expected the BOE opted to hold interest rates at 0.75% in a unanimous vote and made no change to their asset purchases.
  • Perhaps surprisingly however BOE Governor Mark Carney suggested investors and markets appeared too relaxed about the potential for tighter monetary policy (rate hikes) in the future, taking a more hawkish stance than their US and European counterparts.
  • The BOE also upgraded their growth forecast for 2019 to 1.5% from the 1.2% they forecast in February, as they see slightly better global prospects. The BOE added ‘the underlying path of GDP growth appears to be slightly stronger than previously anticipated, but marginally below potential’.
  • The Pound did see some action during the BOE press conference but largely remained within a tight range against the Euro and US Dollar.
  • The Pound closed the day slightly lower than it had started against most of its major currency counterparts, albeit losses were very limited with the worst decline of just -0.19% coming against the US Dollar.
  • US Unemployment Claims 230K (220K Exp)
  • US Factory Orders m/m 1.9% (1.0% Exp)
Overnight

  • Both the Conservative and Labour party have faced a Brexit backlash according to the results of yesterday’s local elections in England and Northern Ireland. Whilst the outcome of at least half of the other English councils are yet to be announced, so far it is clear that the Lib Dems, the Green party and Independents have benefited from the publics frustration over the Brexit deadlock.
  • According to Chinese official media the trade talks between China and the United States may have hit an impasse, raising doubts as to the likelihood of an early deal being struck between the two super powers. The 11th round of talks is due to take place in Washington next week.
  • According to ECB Member, and German Bundesbank President Jens Weidmann, the ECB should press ahead with exiting unconventional monetary policy if inflation allows. Despite the recent gloom hanging over the Eurozone economy, Mr Weidmann believes the improvements in recent German economic data could suggest the weakness seen in the Eurozone’s biggest individual economy could be temporary and as such will pick up speed again.
  • Australia Building Approvals m/m -15.5% (-12.5% Exp).
  • Swiss CPI m/m 0.2% as expected.
Today
  • UK Services PMI and Eurozone Inflation data will be the focus of this morning.
  • This afternoon there is a raft of US economic data set for release. We’ll also hear from a number of Federal Reserve members a little later in the day. Could certainly see some movement in the Dollar this afternoon.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1661 0.00
GBP/USD 1.3024 +0.02
EUR/USD 1.1166 -0.03
AUD/USD 0.6998 +0.01

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Services PMI 50.4 48.9
10.00 EUR CPI Flash Estimate y/y 1.6% 1.4%
10.00 EUR PPI m/m 0.0% 0.1%
13.30 USD Average Hourly Earnings m/m 0.3% 0.1%
13.30 USD Non-Farm Employment Change 181K 196K
13.30 USD Unemployment Rate 3.8% 3.8%
13.30 USD Goods Trade Balance -73.0Bn -72.0Bn
15.00 USD ISM Non-Manufacturing PMI 57.2 56.1