What’s been happening?

UK: Good news for the UK as we currently sit in 2nd position in the medals table at the Commonwealth games. This seems to be in direct proportion to the performance of the pound of late with good buying opportunities against the dollar and euro at present. Sterling’s appreciation against the dollar came on the back of a poor US jobs report delivered to the market late Friday afternoon. The dollar may be tested further this week due to trade war concerns between China and the US which continue to occupy markets.

EU: For us, Germany has always been the glue that holds Europe together with its consistent printing of strong data. But of late German figures have been slipping. Their Industrial Production figures fell woefully short of expectation in March slipping 1.6% and if this week’s CPI figure falls short of market expectations, another dent could form in the euro currency. The big event out of Europe this week will be ECB minutes from their last meeting which are released on Thursday. Draghi will also be speaking in Frankfurt the day before. The market will pay close attention to his language regarding the end of the central bank’s stimulus policy (Due September) with Mr. Draghi already mentioning that QE could be extended if necessary. Should the timeline for completion of QE be brought forward, we may see some euro strength.

US: Friday saw a softer than expected posting for Non-Farm Payroll figures. The growth consensus was expected to come in at 190K for the month of March, but only rose by 103K. The other noticeable figure from the US that increased in March was unemployment. This was higher than expected at 4.1%. The likelihood of the Fed not increasing rates until late 2018/early 2019 was supported by Fed Chair Powell’s speech on Friday where he mentioned that they are aiming for 2% inflation and sustained economic expansion along with the expectation of a strong labour market. Powell went on to say that if the economy continues its current path, gradual fund rate increases will best promote these goals.

 What’s coming up?

UK: There is very little data out of the UK this week with the most noticeable of data out Wednesday in the form of Industrial Production, Manufacturing Production and Construction output. It is also worthy to note that PM May will be in Denmark today for further Brexit negotiations.

EU: Today sees the release of German Trade Balance figures. Wednesday will see the turn of ECB President Mario Draghi speaking in Frankfurt. His comments have the potential to move the market and on Thursday this week the ECB’s monetary policy meeting minutes will be released. Friday German CPI will be released and with German figures not performing too well of late any posting below the expected 0.4% increase could signal further euro weakness.

US: The big data out of the US will be CPI on Wednesday this week. In an interview over the weekend with Fed member Evans it was noted that there is an expectation for US inflation to reach the desired 2% level. This would in turn lend itself to an interest rate rise. Traditionally, Mr. Evans is seen as somewhat of a ‘dovish’ policy maker and such bullish comments could prompt dollar bulls with investors buying the greenback heavily.


AUD was pressured on Friday after the US warned that it will consider up to 1300 new tariffs on several Chinese imports. Global equity markets on Friday fell as a result of this announcement and poured pressure on the Aussie against a basket of currencies. Australia will be very vulnerable to trade war concerns due to its large export economy. Early morning Wednesday GMT the APAC region will keep a keen focus on comments made by RBA governor Philip Lowe.