PMI figures follow mixed week for sterling
A currency market update from Carl Hasty, director of Smart Currency Business.
A mixed end to last week saw sterling push to a fresh three-month high against the US dollar, whilst slipping away from recent highs against the euro.
Although yesterday’s Bank Holiday resulted in reduced sterling trade, there are a number of economic data releases throughout the remainder of the week which could affect markets. Purchasing Managers’ Index (PMI) data from a number of sectors will be released, with manufacturing industry data the first of these today. Following a disappointing two months, a modest increase in manufacturing growth is expected to have been seen throughout April. Construction industry data will follow on Wednesday, but it is Thursday’s services PMI figures that investors will be most keenly awaiting, and a greater-than-expected figure would be well received by investors.
Aside from this, speculation over June’s EU referendum will continue to dominate markets, and anything that may sway the final vote is sure to have a great impact on markets.
Busy week for euro as it tries to build on last week’s momentum
The euro had an excellent end to the week and month on Friday as it strengthened against the US dollar and sterling. The data from the Eurozone on Friday though was a mixed bag as flash Consumer Price Index (CPI) data – a measure of inflation – came out slightly worse than expected at -0.2%.
Unemployment data managed to beat expectations slightly, falling down from 10.3% to 10.2%. Growth figures for the Eurozone also beat the forecasted figure, with a prediction at 0.4% but coming out at 0.6%.
This week, yesterday Purchasing Managers’ Index (PMI) manufacturing data for Spain, Italy, France, Germany and the Eurozone on the whole. Data for the Eurozone as a whole is anticipated to drop slightly from 51.6 down to 51.5. On Wednesday retail sales data is expected to also fall slightly, by 0.1%. Any real swing from the forecasted numbers could impact the single currency this week.
Busy week for US economy
It was a mixed day for the US dollar, with data releases on Friday affecting the currency’s movement. The two main releases of the day had varied results, with personal spending dropping in growth compared to the previous month, while personal income increased, showing that people in the US might now be saving money rather than spending. Consumer sentiment data was also released, showing its lowest level in seven months.
A busy week for US data releases starting yesterday with activity levels for manufacturing from the Institute of Supply Management, with a further release on Wednesday for non-manufacturing activity levels. This is all leading up to Friday’s all-important Non-Farm Employment Change, we can expect earlier releases on Wednesday and Thursday, which are indicators for Friday’s important figures. Average Hourly Earnings data is also released on Friday – this is expected to remain stable.
Busy week down under
Last week was a difficult week for the Australian and New Zealand dollars, with both currencies weakening against sterling.
This has continued into this week with a surprise cut in Australian interest rates to 1.75%, as they try to fight deflation, which saw the Australian dollar lose three cents very quickly. We also have the Australian budget later today which is likely to be expansive as an election looms. Later on today we expect to see movement from the New Zealand dollar due to a number of unemployment data sets to be released late in the evening. A negative or positive shift in unemployment in New Zealand’s economy will cause market fluctuations and could cause swings within the currency against its rivals.