UK’s Manufacturing PMI Misses Estimates
Data just out has shown that Britain’s manufacturing activity expanded at a slower than anticipated pace for May, offering little evidence of a post-election improvement in morale among domestic firms. In the Euro zone, market participants will keep a tab on Germany’s consumer price inflation data for May to ascertain if the threat of deflation in the region shows any sign of abatement.
Across the Atlantic, personal expenditure data for April will be eyed to gain an insight into the second quarter’s economic growth in the US, especially considering that consumer spending remains a major driver of growth in the nation. Additionally, the ISM manufacturing PMI reading in the US will attract significant attention among greenback investors.
Pound Sterling – UK Markets
The just out Markit survey has revealed that manufacturing activity in the UK expanded for May, albeit less than market estimates. After the previous month’s manufacturing PMI figure had shown an unexpected ease amid uncertainty over Britain’s election results, today’s PMI reading failed to bring any relief to Sterling investors. The Pound has lost ground against the greenback following the release of today’s data. Later today, traders will keep a tab on the ISM manufacturing activity gauge in the US for further direction in the Pound-US Dollar pair.
Going forward, this week’s construction and services PMI figures in the UK will be eyed to gain a better insight into the overall health of the nation’s economy for the second quarter. Additionally, the BoE is scheduled to reveal its inflation expectations for the next twelve months. Considering that oil prices continue to remain under pressure, an upside in these expectations seem unlikely. However, any further downside in inflation projections is likely to weigh on prospects of any near term expectations of a rate rise in the UK.
US Dollar – US Markets
In Friday’s trading session, the revised US GDP data showed that the economy contracted, albeit less than expected, during the first quarter of 2015. This contraction was mainly driven by a wider trade deficit, a deceleration in domestic firms’ pace of re-stocking and a downward revision in consumer spending for the quarter. Additionally, cold weather along with a stronger US Dollar and disruptions at West Coast ports weighed on overall activity in the US. However, the greenback showed little reaction to the revised GDP data in the US and remained range bound against its key peers.
This morning, the US Dollar is trading on a firmer footing against the Euro and near its recent highs against the Japanese Yen. Market participants will eye personal spending and consumption data in the US to gauge the health of the economy for the second quarter of 2015. Furthermore, greenback investors will keep a tab on the ISM manufacturing PMI survey in the US which is anticipated to show that pace of expansion in the country’s manufacturing sector picked up after seven consecutive months of decline.
Euro – European Markets
The Euro is trading in a weaker footing against the majors this morning after Greece missed a self-imposed deadline to reach an agreement with its lenders over the weekend, thereby continuing to fuel worries of a default by the debt struck nation. On the macro front, revised data revealed that manufacturing PMI in the Euro zone missed its flash estimates, further pressurising the Euro. Later today, traders will eye the preliminary inflation data in Germany which is anticipated to show that consumer prices rose marginally for May. This print is likely to strengthen expectations that deflationary headwinds in the Euro bloc are easing, ahead of the region’s inflation data due tomorrow.
Moving ahead, Germany’s labour market is anticipated to show that the number of unemployed reduced for the eight straight month during May. Furthermore, the ECB’s policy meeting scheduled later this week is likely to attract considerable attention among traders. The central bank is not expected to announce any new major changes in its current policy stance, however, developments on the recently launched stimulus package will be eyed.
Other Currencies – Highlights
The Canadian Dollar lost major ground against the greenback on Friday following the release of the soft GDP data in Canada. The print revealed that the Canadian economy contracted unexpectedly for the first quarter of 2015, as weakness in oil prices weighed on overall business investment in the nation. Amid the dismal growth performance, speculation among investors has strengthened that the Bank of Canada might cut interest rates further to support growth in the nation going forward. However, the Canadian Dollar pared its losses against the US Dollar in the latter half of Friday’s trading session.
In the absence of any notable releases on the domestic macroeconomic front today, the Canadian Dollar is likely to be influenced by the ISM manufacturing PMI survey and personal spending data in the US. Moving ahead, Canada’s trade data for May will be eyed later during the week, wherein the print is expected to show that the country’s trade deficit narrowed from the prior month.