Data heavy week for sterling
A currency market update from Carl Hasty, director, Smart Currency Business.
Sterling spent last week moving sideways against the euro and weakening against the US dollar. The week ahead contains plenty of economic data releases for investors to get their teeth into and should be very helpful in determining the effect that worries over a Brexit are having on the UK economy.
Consumer inflation figures will be released tomorrow for the month of April, and are forecast to show inflation maintained at 0.5%. Labour data will follow this on Wednesday, with average earnings growth of 1.6% expected to have slackened off slightly when compared to the March figures of 1.8%. Unemployment should remain at a 10-year low of 5.1%, and any deviation from this figure could result in market movement. Retail sales figures will round off the week on Thursday, with a strong recovery expected of 0.3% growth throughout April, following on from the weakest reading in two years throughout March of -1.6%.
Euro vulnerable to movement elsewhere
The end of last week saw little movement for the euro, with the only data of note being the mid-tier preliminary growth figures in Germany and Italy (posting slightly positive in Germany and as expected in Italy), as well as flash growth data for the Eurozone as a whole. The latter was slightly negative. The currency lost some ground to the US dollar, falling to two-and-a-half-week lows, but this was more due to the strength of US data rather than the weakness of the Eurozone data.
Another very quiet day in the Eurozone, with Bank Holidays in most member states. Looking further ahead, we have a rather quiet week in terms of data releases. Of note is the release of Eurozone final Consumer Price Index (CPI) data on Wednesday, which is expected to remain unchanged at 0.2%. The euro remains vulnerable, however, to events elsewhere, which could trigger movement in the single currency.
Busy week for the US
It was a positive day for the US dollar on Friday in terms of the bounty delivered by data releases. Retail sales data posted its biggest growth in six years, followed by the release of Producer Price Inflation (PPI), which failed to meet expectations but still posted growth compared to the previous month. Consumer sentiment was expected to show a small increase from the previous month – however, this surprised by showing positive movements, moving to its highest level for a year.
We can expect a lot more data releases this week compared to the last. On Tuesday we see the release of inflation data in the form of a Consumer Price Index (CPI), which could fall in line with the PPI figure and show a mild increase on the previous month.
On Wednesday we see the release of the US Federal Reserve Meeting Minutes from the meeting that took place earlier this month. This is a key release for investors as it could show how split the Federal Reserve is in regards to another short-term interest rate hike. And to end the week, we can expect another stable figure from the weekly labour data, as well as the start of the G7 meetings which will be centered on the global economic issues.
Busy week for the Canadian economy
This week, the Canadian economy starts its busy schedule tomorrow noon when the manufacturing sales results are posted. They are expected to show further contraction from last month’s figures.
Friday’s release of the Consumer Price Index (CPI) & retail sales data are more likely to cause a shift in market. The CPI figures have been improving steadily since February, and Friday’s figures are expected to stay positive, but not as strong as before.