Newsletter – 4th May 2017

Morning Bulletin

Yesterday

  • Yet another pleasant surprise out of the UK yesterday morning, this time with the Construction PMI print bettering expectations at 53.1; this reading was slightly better than the expected 52.1 and represented the highest since January.
  • Sterling did make some gains following this release however they were somewhat limited.
  • Speaking yesterday morning EU Brexit Negotiator Barnier stated that the UK must meet all of its outstanding financial obligations and liabilities before talks could begin on a post-Brexit trade deal, further adding the ‘Divorce bill’ was not a punishment but simply a settling of accounts.
  • There was a solid print for Q1 Eurozone GDP, coming in at0.5% as expected.
  • There were just the two key data releases yesterday afternoon both of which were out of the US and all in all they were solid:
    • ADP Non-Farm Employment Change 177K (178K Exp)
    • ISM Non-Manufacturing PMI 57.5 (56.1 Exp)
  • The US Dollar was strengthened by these numbers and also made further gains ahead of the FOMC rate decision and statement.
  • UK PM May angrily fired back at the EU yesterday, suggesting recent events demonstrated that some in Brussels do not want Brexit negotiations to succeed, also adding that Britain’s negotiation position had been misinterpreted by the European press.
Overnight

  • Only one place to start and that is with the US Federal Reserve’s FOMC meeting. Unsurprisingly rates were left on hold at <1.00% in a unanimous vote, however the more upbeat tone from the FOMC has seen the US Dollar strengthen in FX space.
  • The FOMC acknowledged that economic activity had slowed somewhat in Q1 but added it was “likely to be transitory” whilst job gains remained solid.
  • Whilst there was no mention that the Fed were looking to hike in their June meeting that certainly appears to be the message taken away by markets and investors.
  • The Federal Funds Futures Rate is currently pricing in a 90% chance of a rate hike in June, versus a 67% chance prior to the meeting.
  • FRENCH ELECTIONS: Following the latest TV debate, of those polled who were watching, 63% said they found Macron more convincing than the 34% for Le Pen.
  • UK ELECTIONS: Latest YouGov/Times Poll: Tories 48% vs Labour 29%.
  • Australian Trade Balance 3.11Bn (3.33Bn Exp).
Today

  • Plenty of key data due for release today. This morning the final UK PMI print will be the focus with Services PMI expected to come in at 54.6.
  • This afternoon we have a raft of data out of the US and Canada kicking off at 1.30pm.
  • 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 1.1805 -0.14
GBP/USD 1.2867 +0.01
EUR/USD 1.0895 +0.12
AUD/USD 0.7397 -0.33

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Services PMI 54.6 55.0
09.30 GBP Net Lending to Individuals m/m 4.5Bn 4.9Bn
10.00 EUR Retail Sales m/m 0.1% 0.7%
13.30 CAD Trade Balance 0.3Bn -1.0Bn
13.30 USD Unemployment Claims 246K 257K
13.30 USD Trade Balance -44.9Bn -43.6Bn
15.00 USD Factory Orders m/m 0.6% 1.0%
17.30 EUR ECB President Draghi Speaks