US Weekly Jobless Claims Awaited
Data recently released has shown that the UK’s trade deficit narrowed more than expected in April. The Euro zone saw a couple of economic releases today. Germany, the largest economy in the Euro area, pulled up a surprise by posting a record high trade surplus in April. However, the nation’s current account surplus narrowed during the same period. Separately, the highly anticipated speech by the European Central Bank (ECB) President, Mario Draghi, failed to create much hype as he reiterated his earlier call for faster progress on the Euro zone’s structural reforms.
Investor focus now turns across the pond, with US weekly jobless claims and wholesale inventories data for April set to be published later in the day.
Pound Sterling – UK Markets
The Pound has extended its losses against the greenback and the Euro this morning. The just out data showed that the UK’s total trade deficit shrunk more sharply than expected in April, as goods export volumes jumped to a three-year high level. Separately, data released earlier in the session showed that Britain’s RICS house price balance index declined in May.
Yesterday, Sterling slightly advanced against its major peers, after official data showed an unexpected rise in the UK’s factory output in April. Britain’s manufacturing production data surprised investors by posting the fastest output growth witnessed in nearly four years. Moreover, the nation’s overall industrial production also saw a significant improvement in April. Interestingly, latest readings were also far better than the growth recorded in March. Further, the NIESR GDP estimate for the three months ended May registered an expansion. However, the jubilation did not last long as the Pound eased back shortly afterward as persistent Brexit worries continued to dominate investor sentiment.
US Dollar – US Markets
The US Dollar fell for the third consecutive session against the shared currency yesterday amid fading expectations that the US Federal Reserve (Fed) would raise interest rates as early as this month. On the data front, a report by the US Mortgage Bankers Association showed that the number of mortgage applications rebounded strongly last week, boosted by a rise in both purchase and refinance applications. Additionally, the Job Openings and Labour Turnover Summary (JOLTS) report indicated that the number of job openings in the US rose above expectations in April. The biggest increase was reported in the nation’s wholesale trade, transportation, warehousing, and utility sector, whereas the professional and business service sector posted a decline.
Moving ahead, market participants will look forward to the release of the US weekly jobless claims data, due later in the day and is expected to record a slight increase. Meanwhile, the nation’s wholesale inventory data for April is likely to hold steady.
Euro – European Markets
The shared currency is trading mixed against the US Dollar and the Pound this morning. Data released earlier during the session showed that Germany’s seasonally adjusted trade surplus surprisingly expanded to a record high level in April. German imports unexpectedly fell in April while exports came in flat. On the other hand, the nation’s current account surplus narrowed in April. Separately, the European Central Bank (ECB) President, Mario Draghi’s speech failed to generate any significant movement in the Euro, as he simply reiterated the need for more structural reforms in the 19-nation currency bloc and stressed that the ECB will not allow inflation to undershoot the target for longer than avoidable. In other economic news, French nonfarm payrolls were revised higher for the first quarter.
Yesterday, the Euro ended higher for the third consecutive session against the greenback, as investors applauded the ECB’s move to buy corporate debt as part of its ongoing stimulus programme. On the data front, the Bank of France business sentiment index unexpectedly declined in May.
Other Currencies – Highlights
The Kiwi Dollar surged to a one-year high level against the greenback this morning after the Reserve Bank of New Zealand (RBNZ) held the benchmark interest rate steady, in line with expectations. At the press conference that accompanied the rate decision, the RBNZ Governor, Graeme Wheeler, indicated that the central bank’s monetary policy will continue to be accommodative and that they would not hesitate to introduce additional easing measures in case inflation fails to pick up. The RBNZ has already cut the official cash rate five times in less than a year. He further suggested that the central bank authorities are more concerned about the rising house prices in New Zealand and that additional housing supply is needed.
Going ahead, market participants will brace themselves for a string of economic releases lined up in New Zealand next week, including the nation’s first quarter GDP, business PMI, and current account balance, in addition to food price and the Global Dairy Trade price indices data.