Euro rally continues, driven mostly by technical factors
07/May/2015 • Currency Updates•
Sterling continued to trade relatively well in spite of uncertainty over the election result and the possibility of a hung parliament. It is following the lead of the Euro and rallying against the US Dollar, although not quite at the same pace as the common currency.
The key PMI services index was an unambiguously positive release for the UK economy. It came out at 59.5, a full point higher than expected by economists, and is consistent with an acceleration of UK growth towards the 3.0% annualized level
Needless to say, all eyes turn towards the results of the UK election, which will be published early tomorrow morning.
The Euro rallied strongly once again to end 1.3% higher against the Dollar.
This rally appears to be driven mostly by technical factors, as the economic releases of the day were not particularly supportive for the common currency. April PMI indices were revised slightly up from their initial flash releases, but retail sales came considerably lower than expected, up just 1.8% on the year. The short covering rally continues – we will have another read tomorrow on how much progress has been made in clearing stale Euro short positions when the IMM report is released.
Very little news of note out of the Eurozone as markets will focus on the outcome of the UK general election.
The Dollar struggled against most other major currencies as investors and traders continue to cut long Dollar positions.
The main news was the publication of the ADP estimate of private payroll growth. This came in under expectations, but this number has proven to be a poor predictor of the all-important payroll number (to be published on Friday). Productivity dropped 1.9% in the first quarter on the back of winter-depressed output, but this was largely expected by the market.
Today will be a quiet day with just weekly jobless claims on tap.