All Eyes on UK’s NIESR GDP Estimate
After two quiet economic calendar days, the UK finally witnessed some important data being released today. The just out data showed that the nation’s industrial production as well as manufacturing production surprisingly advanced in April. Traders would also want to assess today's UK NIESR GDP estimate which is expected to offer a bigger clarity on the macroeconomic picture of the nation. The data holds crucial significance for Britain as it will provide a last look at the UK economy before the controversial European Union referendum vote. Meanwhile, the data docket in the Euro zone is devoid of any important data releases today.
Across the Atlantic, market participants will eye the April update on US job openings for an additional perspective on the labour market after last week’s surprisingly weak employment report, along with the nation’s latest weekly mortgage applications report.
Pound Sterling – UK Markets
The Pound is trading lower against its major peers this morning. Traders digested positive UK economic data against the backdrop of a downbeat outlook from the World Bank. The just out data showed that the UK’s industrial output grew at the fastest pace in nearly four years in April, buoyed by production in the pharmaceutical and automobile industry. Adding to the positive sentiment, manufacturing output rose at its fastest pace since July 2012. Going ahead, investors await the release of Britain’s GDP estimate for the three months to May, published by the reputed think-tank NIESR. The indicator has been very steady and posted three consecutive gains of 0.3%. Separately, the World Bank slashed its UK growth forecast for 2016 and 2017, firing a warning that a vote in favour of abandoning the European Union would further undermine confidence in global trade and affect growth.
Yesterday, the Sterling spiked versus its major peers despite the lack of an obvious catalyst. Meanwhile, house prices in Britain rose faster than forecasted last month, rebounding from a dip in April.
US Dollar – US Markets
The US Dollar extended its losses for the second consecutive session against the shared currency and the Pound yesterday, as investors continued to focus on the US Fed Chairwoman, Janet Yellen’s lack of guidance about when an interest rate increase would materialise. On the data front, the most relevant piece of news that came from the US yesterday was the IBD/TIPP economic optimism index, which edged lower in June, in line with market expectations. Meanwhile, the nation’s consumer credit growth cooled off a bit in April, after increasing by a record amount in March. While consumers expressed caution on running up huge credit-card debts in April, non-revolving debt such as car and student loans also registered a slower rise. A separate report showed that US nonfarm productivity fell less sharply than initially estimated, whereas the unit labour costs surged for the second straight quarter.
Looking ahead, against the backdrop of dismal nonfarm payrolls from the US last week, investors await the release of the JOLTS job openings report for April, due later in the day.
Euro – European Markets
The shared currency is trading higher against its major peers this morning. With no significant data points scheduled for release in the Euro zone today, investor attention will shift towards Mario Draghi’s speech tomorrow after he sounded cautious at the central bank’s press conference last week. Earlier in the session, the World Bank projected the 19-nation currency bloc to grow at a modest rate of 1.6% in 2016, same as last year.
Yesterday, the Euro reacted favourably to the final reading of the Euro zone’s first quarter GDP data and surged towards the crucial 1.14 mark against the greenback. The region’s reputation for being a straggler in the global economy appeared to be overly pessimistic, after revised figures showed that the Euro zone GDP grew above expectations to a one-year high level during the first three months of this year, thus providing a much-needed respite to the ECB policymakers who have vociferously defended the effect of the central bank’s monetary stimulus package to critics.
Other Currencies – Highlights
The Japanese Yen extended its previous session gains against the US Dollar this morning after data showed that Japan’s economy grew faster than initially estimated in the first quarter, helped by a rise in corporate investment and sustained consumer demand. Additionally, a separate government report showed that the nation posted a current account surplus for the 22nd consecutive month in April, as falling oil prices reduced imports and a rising number of foreign tourists continued to push up a travel surplus. Moreover, Japan’s Eco Watchers outlook index rose above expectations in May. On the other hand, the current conditions index dropped more than expected during the same month. Moving ahead, investors will look forward to Japan’s machine tool orders and tertiary industry index data, scheduled for release later this week.
In other economic news, Japan’s main composite indices of economic indicators rose in April for the second straight month. Both, the leading indicator and coincident index registered a rise.