Category Archives: FX News

Data-wise, a calm macro calendar had no directional impact on markets. Of the limited releases to mention, the most recent US initial unemployment claims remained at 208k, 

On the currency front, classic safe havens were in demand despite the European session’s slight risk aversion. The dollar, yen, and Swiss franc were all on the front foot. However, the dollar gave up its gains overnight.

The main focus of today will be the April US labour market data. The job market has loosened marginally in recent months, although it remains tight overall.

This pattern is expected to continue, with payrolls increasing by 243k, the unemployment rate remaining at 3.8%, and average wages growth decreasing to +4.0%. y/y

This morning, we have the Purchasing Managers Index figures for Spain, Italy and France, where It is expected that there will be some positive movement on these from the previous month.

German PMI is forecasted to show a slight expansion from March, however it still remains below the 50 threshold that indicates economic expansion.

In the States, the change in the value of new orders is set to come in at 1.4 percent as manufacturing picks up. 

Last night the US Federal Reserve held interest rates in a range of 5.25 percent– 5.5 percent. Inflation in the US remains high at 3.5 percent, well above the 2 percent target rate.

Fed Chair ‘Powell’ indicated last night that it is unlikely the Fed will hike rates again this year.

Following last nights Fed meeting, the US dollar weakened off a little against the pound and euro, as markets lessened their expectations on any future rate hikes.

GBPUSD has regained some of its losses since yesterday evening. Volatility in the market has been low for GBPEUR this week trading in a tight 50-point range.

Tomorrow, we have the PMI services for the UK and Employment figures for the EU. Both sets of data will will be closely watched.

To cap off a busy week, Non-Farm payrolls will garner most of the attention tomorrow where it is expected we could see a fall from the previous month.

Other key US data will be the ISM Non-Manufacturing Survey released at 3pm.

In the Eurozone, we received several sets of early Q1 GDP figures. Quarterly growth forecasts in France, Spain, Italy, and Germany were all higher than expected. Meanwhile, the Eurozone aggregate number rose 0.3% in the quarter, versus a 0.2% projection.

There were also inflation figures, with the Eurozone core HICP rate falling to 2.7% in April from 2.9% (against a forecast of 2.6%).

In the United States, the Fed’s preferred pay indicator, the Employment Cost Index, performed better than expected in Q1, rising by 1.2% (against a forecast of +1.0%).

Currency-wise, the Eurozone GDP statistics gave some support for the euro. However, these advances were short-lived. Instead, the dollar has firmed during the last 24 hours.

This evening marks the end of the two-day US Fed policy making meeting. The general view is that interest rates should not be changed. Indeed, due to higher than expected inflation and recent hawkish Fed remarks, the first-rate decrease is not completely priced in until December.

Therefore, Chair Powell’s press conference will be closely analysed for guidance on the outlook for US rates.

A busy start to Tuesday’s economic calendar, with high impacting data being released across Europe this morning.

Germany kicks off the day with Employment and Gross Domestic Product releases, with the latter being a key indicator as to how the Eurozone’s largest economy is fairing. Markets are expecting a small rise to 0.1% growth, up from last quarters -0.3%.

The European Central Bank are set to announce their inflation reports this morning, with expectations that inflation will remain unchanged at 2.4%. Anything below the 2.4% forecasted will further enhance the possibility of a June 6th rate cut for the ECB.

Looking ahead this week the UK releases its Purchasing Managers Index for Manufacturing, with investors expecting a decline in the manufacturing sector to 48.7 which falls below the growth mark.

For the US the key releases will come on Friday, with Employment and ISM Non-Manufacturing Surveys the main releases at the end of the week.

On the currency front the pound clawed back its losses against the Euro yesterday, creeping back above the yearly average.

As for the pound to dollar rate, the pound has managed to gain some strength. Gaining 200 points on last weeks low.

The start of the week begins with a raft of Euro data.

Today’s EU Business & Consumer Confidence and German CPI data will be closely watched for signs that the eurozone is growing.

German inflation will be of particular interest, especially for the ECB. French Inflation Is due tomorrow. Should inflation come in above the expected levels, we could see some euro strength as this will decrease the odds of an ECB rate cut in July.

There is no UK or US data today, therefore markets will be dictated by today’s euro data.

The key focus this week will be Wednesdays US Fed policy announcement. Markets will be super keen to see what the Feds latest policy update will reveal and the timing of rate cuts.

At the beginning of the year there was a lot of talk on how many rate cuts we would see in 2024, this has now changed dramatically, although Fed Chair ‘Powell’ has insisted that interest rates may be cut in June.

The pound has held onto its late gains against the euro over the weekend sitting at a near two-week high. GBPUSD sits well under its highs at the start of the month but has gained some momentum of late, clawing back 1.5 percent last week.

In terms of data this week, for the UK we have the Consumer Lending on Tuesday, Nationwide house Price Index on Wednesday and PMI (services) figures on Friday.

For the US, key data other than the Fed policy announcement will be Fridays Non-Farm Payrolls.