18th April 2017 Market Update
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🇬🇧 GBP – Sterling enjoyed a very positive week after inflation remained at a three year high of 2.3%, wage growth exceeded initial market expectation climbing to 2.3% and unemployment remained at 4.7%.
Another reason for the gains seen in the currency was due to the idea that Sterling has been seen as a safe haven amongst tensions between North Korea and the US.
The only data out this week is out on Friday where we have March’s retail sales report, forecast to decline to 3.6% from 3.7% Until then, moves on the pound could well be dictated by continued perception that the currency is seen as a safe haven amid geo-political tensions in North Korea.
🇪🇺 EUR – There was very little data out over the course of last week that really moved the single bloc currency. The only thing worth mentioning was that inflation in Germany remained at 1.6%.
Revised Eurozone inflation figures are due for release on Wednesday as well as services and manufacturing.
The main focus however looks set to be French presidential election on Sunday and for much of the week the most recent polls will dictate how the euro trades.
🇺🇸 USD – The US dollar traded on the back foot throughout the course of last week as investors sold the dollar to seek out alternative safe havens. Donald Trump’s comments on Thursday that the US dollar is “too strong” also weakened the greenback.
The final onslaught of selling came on Friday after retail sales fell by 0.2% and inflation fell more than expected to 2.4% putting any thoughts of a hike in interest rates to the back of the mind of investors.
Friday’s services and manufacturing PMIs looks to be the only notable data out of the US. But with a failed missile test launch by North Korea on Sunday and ongoing geo-political tensions, appetite for the US dollar could continue to be weak.
10.00am – Inflation Rate, forecast to remain at 1.5%.
1.30pm – Building Permits, forecast to improve to 1.25m.
Our View: With the majority of key data due for release on Friday, currency moves until then look set to be dictated by developments in North Korea as well as polls for the French presidential elections.
Given the above, the pound could well enjoy safe haven flows, as investors could well turn their back on the US dollar and the euro.
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