Recently published data has suggested that activity in the UK construction sector slowed more than estimated in April. In the Euro region, data showed that private sector activity continued to expand in April, in line with estimates. Earlier in the day, data showed that the French trade deficit narrowed in March, slightly below the market forecasts. Going forward, market participants will eye the Euro zone’s retail sales data for further direction.

Across the Atlantic, market participants will look forward to today’s final print of durable goods orders for March scheduled later today. Separately, the final print of the services PMI numbers in the US will also attract considerable market attention. Also on tab will be US trade data and ADP employment change figures scheduled later today.

Pound Sterling – UK Markets

The Pound extended its losses against the greenback and the Euro this morning, after data showed that Britain’s construction PMI declined more than expected to a three year low level in April. Looking ahead, the services PMI data, scheduled for release tomorrow, will be the key factor as this sector accounts for over 80% of Britain’s economy. Further, the Pound will continue to be dominated by sentiment surrounding the European Union referendum next month.

Yesterday, Sterling traded lower against its major peers, after the UK’s manufacturing PMI print revealed that the sector fell into contraction territory in April, mainly dragged lower by soft trends in production and new orders along with declines in employment. The Pound received another blow after a recent poll indicated that the majority of Britain will likely vote to exit the European Union. Separately, overnight data showed that overall shop prices in the UK, including both food and non-food, fell in line with market expectations in April, as retailers resorted to discounting in order to win sales amid intense competition across the industry.

US Dollar – US Markets

The US Dollar halted its six-day decline against the shared currency and posted modest gains yesterday, as hawkish comments by two regional Federal Reserve (Fed) officials stoked speculation that the US central bank would consider raising interest rates next month. The Atlanta Fed President, Dennis Lockhart, called the June rate rise a real possibility. Humming the same tune, the San Francisco Fed President, John Williams, expressed confidence in the US economy and seemed unperturbed by the slowdown in the nation’s first quarter gross domestic product. On the data front, the IBD/TIPP economic optimism index advanced above market expectations to a one-year high level in May, as an upbeat jobs market provides impetus to personal finances.

Moving ahead, investors will look forward to the ADP non-farm employment change figure, due later today, ahead of Friday’s crucial non-farm payrolls numbers. Additionally, the productivity and unit labour cost data for the first quarter, which offers an important insight into possible future wages and inflationary trends is also on tab. This will be followed by the final readings of services PMI and durable goods orders data.

Euro – European Markets

The just out data indicated that the Euro zone and Germany’s final services PMI data for April surprisingly came in below its preliminary forecast. On the other hand, in Italy, service sector growth picked up in April from a 13-month low level. Meanwhile, French service businesses returned to growth in April, as firms cut prices further. However, it came in slightly weaker than the preliminary estimate. Moving ahead, the Euro zone retail sales data, which is due in some time, is expected to decline in March.

Yesterday, the Euro traded lower against the US Dollar amid a broad-based strength in the greenback. Data showed that prices of goods leaving the Euro zone’s factory gates rebounded above expectations on a monthly basis in March, providing a flicker of hope on the inflation front. This was the first increase in a year and the rise was largely brought about by an increase in energy costs. Separately, the European Commission indicated that growth in the Euro zone will be slightly weaker this year than previously projected, mainly due to an economic slowdown in China.

Other Currencies – Highlights

The Kiwi Dollar continues to trade lower against the US Dollar this morning, after data released earlier today showed that commodity prices in New Zealand dropped last month.

The Kiwi Dollar recorded significant losses against the greenback in the previous session, after New Zealand’s unemployment rate rose above expectations during the first three months of this year. However, the number of people employed also came in stronger than expected for the first quarter. Additionally, the nation’s labour market grew at its fastest rate in more than a decade, mainly led by record migration and as more people seemed to participate in the jobs market. In other economic news, prices fell in the latest Global Dairy Trade auction. The Kiwi Dollar had found some support at the end of last week after the Reserve Bank of New Zealand (RBNZ) remained on the sidelines and held the benchmark interest rate steady at 2.25%. Following the announcement, the RBNZ Governor, Graeme Wheeler, left the door open for further interest rate cuts in order to achieve the central bank’s inflation target.