8th May 2017 Market Update
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?? GBP – Sterling enjoyed a good week following a strong set of PMI figures for the month of April. UK manufacturing hit a three year high and UK construction and services hit a four-month high soothing fears around the UK economic outlook following a slow first quarter.
The key day for the UK this week is Super Thursday, where we have the Bank of England’s monetary policy and interest rate decision as well as the quarterly inflation report.
?? EUR – Eurozone data was pretty mixed last week with manufacturing data and the Eurozone latest unemployment figures both disappointing but services and retail sales shooting to the upside. However, despite the data, the euro enjoyed a good week following a stirring speech by Mario Draghi calling for a united Europe and markets also pricing in a high probability of Emmanuel Macron winning the French election.
Indeed this expectation has followed through with Macron being announced the next French president last night, boosting the euro to a six month high against a troubled US dollar. Markets will be braced for another speech by Mario Draghi on Wednesday as well as German GDP figures on Friday.
?? USD – Despite relatively positive data throughout the course of last week, the dollar finished the week lower. The key news was that the Fed elected to hold interest rates at 1% and April’s job report revealed that an extra 211,000 jobs were added and the unemployment rate fell to 4.4%.
The only major news this week will fall on Friday with retail sales expected to increase for April and inflation forecast to fall to 2.3% from 2.4%.
10/05/2017 – 12:00pm – ECB President Draghi Speech
12/05/2017 – 07:00am – German GDP: Expected to rise to 0.7%
12/05/2017 – 07:00am – German Inflation: Expected to remain at 2%
10/05/2017 – 10:00pm – RBNZ Interest Rate Decision: Expected to remain at 1.75%
11/05/2017 – 12:00pm – BoE Minutes, Interest Rate, Monetary Policy Decision and Quarterly Inflation Report
12/05/2017 – 01:30pm – Retails Sales: Expected to rise to 0.6%
12/05/2017 – 01:30pm – Inflation: Expected to fall to 2.3%
Our View: The news of Macron winning the French presidential election looks like it was pretty much priced in to the euro with gains on the single currency limited. Focus now for the Eurozone will turn to Mario Draghi and the ECB, and if the central bank is ready to continue to taper its current QE programme.
Super Thursday will be primary focus for the pound and any cautious tone from the Bank could cause the pound to lose the gains that it has made in recent weeks.
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