Monthly Archives: May 2024

European Consumer Confidence is the major economic release this morning. Markets are forecasting an increase in confidence to -14.3 up from -.14.7.

Todays data will be released alongside employment figures for the Eurozone. The percentage of the total Eurozone work force that was unemployed and seeking work during the previous month is expected to stay at 6.5%.

Looking ahead today, the US will also release their Employment figures, markets are expecting the number of people who filled for unemployment benefits for the first time in the US to come in higher than last weeks figure of 215k. This is a key indicator to the US economic outlook.

Alongside this, Gross Domestic Product for the USA will also be reported. It is widely expected that GDP will have fallen massively to 1.3% quarter on quarter from 3.2%.

With no real major economic releases for the UK this week, the focus will shift to the European Central Banks Consumer Price Index Flash Estimate. Investors will keep a close eye on this, as a June rate cut is potentially on the cards for June. Inflation is expected to stay unchanged at 2.8%.

The pound has continued its strength against both the euro and the dollar, with markets reacting well to the news of the UKs general election in July. This could present an opportunity to take advantage of the rates, with the pound reaching month highs on the dollar and near two-year highs on the euro.

A good start to the week for the pound following last week’s above-consensus UK inflation print and announcement of a General Election.

The pound has benefited on the back of this and is showing promising signs of strength heading into the new ‘shorter’ week.

Markets are now not expecting to see a rate cut in June and the earliest opportunity for a rate cut to happen would be August.

 For the EU, there were several ECB policymakers speaking yesterday. They spoke about the likelihood of an interest rate cut at next week’s policy meeting and one suggested that there may be a further immediate reduction in July.

Markets have fully priced in a reduction on the headline rate on 6th June that has seen the euro weaken.

 This afternoon for the US, we have the Home Price Index and Conference Board Consumer Confidence Survey.

The US dollar remains under pressure against both the euro and the pound as the latest measures of consumer confidence in the US have been declining of late, possibly due to the slump in inflation and lack of interest rate cuts.

For the UK and Eurozone it is a quiet day, therefore markets will shift their attention to tomorrows German inflation figures, Wednesdays US growth figures and Fridays French Inflation and growth figures.

The flash PMI results for May were mixed. In the United Kingdom, both sectors showed growth, while the services reading fell. Meanwhile, both Eurozone PMIs rose, while the manufacturing sector remained in contraction mode. Similarly, both of the US PMIs increased in May. 

The numbers, however, are unlikely to prevent the ECB’s rate cut in June. The publication had no significant impact on Eurozone market rate expectations. Currency-wise, after treading water in early trading, the dollar reclaimed the upper hand.

However, the biggest FX pairings were limited to fairly narrow ranges yesterday. As trade begins this morning, UK retail sales fell 2.3% in April (vs. -0.6% expected).

However, the impact on sterling was modest in early trading. There is a very light data calendar for the rest of today, so comments from central bank officials will be in focus.