Calm day in FX markets as traders await UK Election results
06/May/2015 • Currency Updates•
A moderate rebound in Sterling yesterday saw the Pound rise by around 0.3% against the Greenback.
Headline focus continued to be on the upcoming General Election and the possibility of a hung parliament, with no plausible coalition able to ensure a majority. Sterling is taking this uncertainty remarkably in its’ stride, as yesterday’s trading remained calm.
No macroeconomic news of note was published yesterday in the UK and, the absence of dramatic swings in the newly published poll numbers, made for a dull day of low volatility in Sterling.
Today we should see some volatility around the publication of the important PMI services index, when markets will be looking for confirmation of the slowdown in the UK economy denoted by the weak first-quarter GDP numbers.
The Euro rebounded to finish trading 0.5% up against the Greenback.
The main news was the publication of the ECFIN economic forecasts. These were mostly revised upwards, reflecting recent Eurozone economic optimism. The conspicuous exception was Greece, where growth and budgetary execution are now expected to worsen again, in what is seen as a ploy to add pressure to the Greek Government.
Elsewhere, Eurozone producer prices came in slightly under expectations, rising just 0.2% for the month of April and staying clearly negative at -2.3% vs a year ago, signalling that deflationary pressures in the Eurozone have not abated yet.
Important macroeconomic news will be released today in the Eurozone including retail sales and final April PMI index numbers.
Another weak day for the US Dollar which fell moderately against most of its peers.
Trade numbers came in weaker than expected in March, as the trade deficit widened to over $51 billion in a sign that the strong Dollar is filtering through to the US external sector. More positive news came from the PMI business indices. The services sub-index, in particular, blew away expectations, coming out at 57.8, further lending credence to the notion that the US slowdown was mostly a result of harsh weather conditions.
Today we get the first-quarter productivity numbers and a speech by FOMC member Lockart.
Rest of the world
New Zealand unemployment came out vastly below expectations, making it more difficult for the RBNZ to start cutting rates in order to weaken the overvalued Kiwi.