US Initial Jobless Claims in Focus
Today, investors will look forward to a report showing the number of persons applying for first-time unemployment benefits in the US. Also on tab will be regional economic releases in the form of Chicago Fed National Activity Index and Philadelphia Fed Manufacturing Survey, along with a couple of speeches by key Fed officials scheduled later in the day.
Later today, investors will look forward to the publication of the minutes of the European Central Bank’s (ECB) previous monetary policy meeting. Also, the construction output numbers in the Euro zone will be eyed by investors. Earlier, data showed that the French unemployment rate came in unchanged and in line with estimates for March. The just out data showed that UK retail sales rebounded in April.
Pound Sterling – UK Markets
The just out data showed that British retail sales bounced back much more strongly than expected in April, calling the Bank of England (BoE) to normalise monetary policy sooner rather than later as private sector consumption remains one of the leading drivers of growth and inflation in the country. This brings good news in the UK, after the CBI distributive trades data, released last month, had tumbled to a four-year low level and entered into negative territory.
Yesterday, the Pound hit a three-week high level against the shared currency, after the latest ‘Brexit’ poll result showed the 'Remain' camp in the lead. This news quickly eclipsed the mixed UK labour market data, realised earlier. Data showed that Britain’s unemployment rate remained steady at a decade-low level of 5.1% for the fifth consecutive month in April. Further, the number of people claiming unemployment-related benefits surprisingly declined during the period. However, investors were disappointed by the slowing of average weekly earnings excluding bonuses.
US Dollar – US Markets
The US Dollar hit its highest level against the Euro in over three weeks during yesterday’s session after the US Federal Reserve’s (Fed) April monetary policy meeting minutes turned out to be more hawkish than expected. An account of the meeting showed that most policymakers believed that an interest rate increase in June is likely if US economic conditions warrant. The Fed will next meet in the third week of June and the Fed Chairwoman, Janet Yellen, is scheduled to speak twice before the meeting. Market participants will definitely sit up and take note of these speeches. On the data front, a report by the US Mortgage Bankers Association showed that total mortgage application volumes decreased last week.
Moving ahead, a clutch of US economic data will hit the wires today and given the recent Fed minutes release, all incoming data will call for a closer-than-normal examination. Investors will watch out for the US Labour Department’s weekly jobless claims report, along with the Philadelphia Fed’s manufacturing and the Chicago Fed’s national activity indices data.
Euro – European Markets
The shared currency has trimmed most of its previous session losses against the US Dollar to trade around the 1.12 handle this morning, as it takes a breather from hitting multi-week troughs yesterday following the release of the surprisingly hawkish US Fed’s April meeting minutes. Data released earlier today showed that the French jobless rate held steady in the first quarter, compared to last year’s fourth quarter reading. Moving ahead, focus now shifts towards the ECB’s April monetary policy meeting minutes, due in a few hours. While the central bank opted to keep monetary policy unchanged during the meeting, investors will be interested in finding out how the ECB looks at the Euro zone’s economic prospects after the ECB Chief, Mario Draghi, stated that economic conditions have improved in the region.
Yesterday, the final reading of the Euro zone’s consumer price index confirmed that the region fell back into deflation in April, indicating that scrutiny over the effectiveness of the ECB’s monetary policy decision will continue.
Other Currencies – Highlights
The Australian Dollar slipped to a fresh two-and-a-half-month low level against the greenback this morning following mixed jobs numbers from Australia. Data showed that the nation’s unemployment rate unexpectedly remained steady at 5.70% in April. However, this good news was short-lived after further data indicated that the employment growth was entirely reliant on part-time jobs as full-time positions declined for the second consecutive month.
Earlier during the session, the Australian Dollar was dragged down by the release of the US Federal Reserve’s April meeting minutes, which revealed that the prospect of an interest rate increase in June was far greater than anticipated. Additionally, Australia’s wage price index rose below market expectations, posting the weakest quarterly and annual increase on record, reflecting the nation’s subdued inflation environment and keeping the door open for further interest rate cuts this year. On the other hand, the nation’s Westpac leading index rebounded in April.