An Empty Data Docket in the UK Today
There is no economic data lined up for release in Britain today. Meanwhile, in Germany, investors await the release of German Bundesbank’s (Buba) monthly report, which contains relevant articles, speeches, statistical tables, and also provides a detailed analysis of current and future economic conditions from the bank's viewpoint. This latest report will be keenly watched by market participants, which follows closely on the heels of Germany’s consumer price inflation and gross domestic product (GDP) data. German consumer prices declined in line with expectations in April, while on the other hand, the nation’s GDP rose more than anticipated in the first quarter.
Across the Atlantic, an index of sentiment from the National Association of Homebuilders is due for release, in addition to an update of the New York Fed’s regional manufacturing data.
Pound Sterling – UK Markets
The Pound is trading on a weaker footing against the US Dollar and the shared currency this morning. The UK data docket looks empty for today. However, Britain will brace itself for a whirlwind week ahead with a slew of economic indicators scheduled for release. First up, investors will pay close attention to the UK’s consumer price inflation report for April, wherein they expect it to post another gain. Going further, the latest batch of employment data is due, including April’s jobless claims figures and March’s quarterly wage and unemployment rate reports. Britain’s retail sales report, the primary gauge of consumer spending, follows the next day with market participants hoping for a rebound in April. Eventually, this week will close with the relatively light CBI trends print for May.
On Friday, Sterling declined against its major peers after Britain’s construction sector declined sharply in the first quarter and the International Monetary Fund joined the cacophony of warnings that Brexit could be very damaging for the UK. Separately, overnight data showed that the UK’s Rightmove house price index advanced in May.
US Dollar – US Markets
On Friday, the greenback rose to a two-week high level against the Euro after a surprisingly strong reading on US retail sales helped calm investors nerves and bolstered expectations that the US Federal Reserve could raise interest rates sooner than anticipated. Sales at US retailers leaped in April by the most in a year, suggesting that consumer spending, the cornerstone of the nation’s economic growth, will help the economy regain momentum after growth almost stalled in the first quarter. The rise in retail sales was broad-based but was mainly spearheaded by gains among auto dealers, gas stations, and internet retailers. Further, the US Dollar received an additional boost after the University of Michigan’s gauge of consumer sentiment posted a stronger-than-expected rise, similar to a reading on business inventories. Meanwhile, a separate report showed that US producer prices rebounded slightly in April after two straight months of declines.
Looking ahead, the US NAHB housing market index and the latest index of manufacturing activity in New York, both for May, are scheduled for release later today.
Euro – European Markets
The shared currency declined sharply against the US Dollar on Friday amid a broad-based strength in the greenback following a strong rebound in US retail sales data. This led to the Euro falling below the crucial 1.13 mark for the first time this month. Additionally, on the domestic data front, the Euro zone's economic growth came in a little shy of expectations in the first quarter this year, leaving the European Central Bank (ECB) in a quandary as to how much more ammunition the central bank has to pull out of its artillery to get the economy on the path to recovery.
The Euro is trading higher against the greenback and the Pound in the morning session, ahead of the German central bank’s monthly report about its assessment of the economy, scheduled for release in a few hours. Going ahead, this week will witness several data releases from the 19-nation currency bloc. This includes the Euro zone trade balance, final consumer inflation data and the ECB’s April meeting minutes.
Other Currencies – Highlights
The Canadian Dollar has reversed its prior session losses and is trading on a firm footing against the US Dollar this morning, buoyed by an advance in crude oil prices. Looking ahead, the Canadian Real Estate Association is expected to release its existing home sales data for April, later in the day. Additionally, the Bank of Canada (BoC) is due to release its semi-annual report featuring articles related to the Canadian economy and central banking. Meanwhile, investors will also look forward to the US NAHB housing market index and the NY Empire state index for further cues in the US Dollar – Canadian Dollar currency pair. Further, there are several data points scheduled for release in Canada this week which will help round out the picture on how the economy performed in the first quarter. These include the nation’s consumer price index for April and retail sales figures for March.
During the previous session, the Canadian dollar weakened against the greenback after US retail sales data surpassed expectations and consumer confidence numbers surged higher.