Tag Archives: USD

This morning, a flurry of European economic data has already been released. German industrial figures showed a downturn in new purchase orders that came in below the market consensus for the fourth consecutive month at -0.2 percent (forecasted 0.5 percent).

Todays most crucial economic event is the European Central Bank monetary policy announcement, which will be closely monitored by investors.

Markets are expecting the ECB cut interest rates before the Federal Reserve and the Bank of England, investors have priced in a 25-basis point cut to reduce the headline rate to 4.25 percent.

ECB President Lagarde’s speech will be carefully watched to see her outlook on when the next rate cut will be, however future wage data and inflation figures could shift her decision.

Elsewhere in the European Union, the change in the value of all goods sold is expected to fall -0.3 percent in April. This forecast further supports the ECB’s decision to reduce rates.

GBPEUR has been fairly flat in the build up to the ECB interest rate decision today. This week Pound to Euro has been trading in a tight 40-point range struggling to find any volatility, this is expected to change later on today after the ECB refinance rates.

Overnight, Prime Minister Rish Sunak reminded the country that he is still in the race by overcoming his rival Keir Starmer in the first election debate.

A post-debate YouGov poll found Sunak to be the better performer by 51-49%, as he went on the attack and strengthened the Conservatives message to the people. Starmer did not appear to appreciate the format and was somewhat flustered by Sunak’s strategy of pressuring Labour for details on its solutions to the country’s number of issues.

Looking ahead to the next day, the US non-manufacturing ISM for May will be the primary data focus. It is predicted that the index will return to expanding territory, increasing to 50.8 from 49.4. Producer price inflation for April is expected throughout the Eurozone. 

For the remainder of the week the European Central Bank’s decision on Thursday is all but certain to be the first major central bank to cut interest rates as it shrugs off a rise in inflation and takes a different path in monetary policy from the UK and US.

Markets and ECB officials are highly confident that the central bank will lower its benchmark deposit rate by 25 basis points from a record high of four percent tomorrow. Combined with Friday’s US job report, these are the main highlights, However, keep an eye on polls, as volatility may increase if the outcome is less certain.

Purchase Manager Index are the major releases this morning.

The UK is set to release its Manufacturing Index, where It is expected to post a positive number. Last month, markets saw the sector fall below the 50-expansion level. However, forecasts are expected to come back in above the 50 level at 51.3.

As the week goes on, German Employment data is the key release tomorrow. Markets are poised to tune in to this release as employment is a key indicator to the current state of the economy.

Wednesday is the busiest day of the week in terms of economic releases, with the European Central Bank releasing their Interest Rate Announcement. Markets have pencilled in a cut of 0.25%.

In the build up to this event, the currency market may experience some volatility.

As for key US releases this week, Non-Farm Payrolls are released on Friday. Markets are forecasting a rise to 190k (from 175k)

The pound has continued to stay at yearly highs for the GBP/EUR rate. As we get closer to the release of the ECBs interest rate announcement on Wednesday, market fluctuations will be heightened. Any cut in rate and markets will likely see the pound increase its strength against the euro.

As for GBP/USD we are still sitting at the highest level since March.

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.