A packed economic calendar ahead

This week sees a busy economic calendar with key releases due from all developed economies, after markets struck a risk-on tone on Friday following positive Chinese data.

Previous Day's Market Highlights

Markets struck a risk-on tone on Friday after positive Chinese data and strong US earnings allayed some fears of a broader economic slowdown. The main beneficiaries of such a change in sentiment were the commodity currencies, with the Australian, New Zealand and Canadian dollars all gaining more than 0.5% over the course of the day. The Aussie was the pick of the bunch however, gaining more than 0.7%, as better than expected Chinese export data underpinned the currency. Chinese exports increased at an above-forecast 14.2% in March (on a year-on-year basis) which is likely to have a positive follow-through effect on the Australian economy due to the two countries close trading relationship. This impact was also felt in the Kiwi dollar, while the Canadian dollar found broad support after a further modest increase in oil prices, with US WTI crude rallying more than 1% over the course of the week. 
Elsewhere, the euro also rallied, adding around 0.4% over the day after industrial production figures beat expectations. Production decreased at only 0.2% on a month on month basis in February, better than the 0.6% decrease expected, and relieving some fears of a prolonged soft patch of economic activity in the euro area. Meanwhile, the dollar fell, losing 0.3% over the day, as risk-on sentiment and poorer than expected consumer sentiment figures weighed on the greenback. Preliminary data from the University of Michigan, the most widely observed survey, showed consumer sentiment declining to 96.9 from a previous level of 98.4. Though sentiment remains at a healthy level, a decline in future expectations of inflation may spark some concern from the Fed. In contrast to both the dollar and the euro, the pound was quiet on Friday, with little in the way of news or economic data to stimulate volatility. Over the day, sterling was broadly unchanged against the dollar and fell 0.3% against the euro. 
In other markets, equities rallied after a strong start to US earnings season. The pan-European Stoxx 600 added 0.2%, while the US benchmark S&P 500 gained 0.65%, recording its 3rd straight weekly gain. Finally, oil prices also gained as tightening supply continued to support the market. Both Brent and WTI gained more than 1% over the course of the week.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1560 1.1787 1.1463 2.75%
GBP/USD 1.3080 1.3311 1.2976 2.52%
EUR/USD 1.1310 1.1448 1.1183 2.31%
GBP/AUD 1.8245 1.8785 1.8229 2.96%
GBP/NZD 1.9317 1.9512 1.8960 2.83%
GBP/CAD 1.7446 1.7795 1.7327 2.63%

Today's Market Highlights

A busy week for economic data begins with a relatively quiet calendar, with no tier 1 releases due from the UK, eurozone or US on Monday. Markets may pay some attention to this afternoon’s manufacturing survey from the New York Fed, with the index set to rebound from its lowest level in almost 2 years, a reading of 6.0 is expected. Though the data is not typically market-moving, some impact may be felt should the release miss to the downside, especially in light of recent weak production data from other major economies. Today’s only other notable release is the Bank of Canada’s quarterly Business Outlook Survey which markets are likely to closely examine for signs of decreasing business sentiment against a mixed backdrop in the domestic Canadian economy. A couple of central bank speakers are also due, with markets set to hear from the BoE’s Haskel in addition to the Fed’s Evans. 
The remainder of the week is much busier, with a number of key releases due from almost all major global economies. 
In the UK, the busy economic calendar should more than make up for the likely absence of Brexit-related news due to Parliamentary recess. The primary data highlight will be Tuesday’s labour market report, an area which has held up well in recent months despite Brexit-related uncertainties.  Markets will be looking for further signs of a tight labour market, though wages are expected to modestly pull back from post-crisis highs to 3.2% on a 3m/y basis. Other highlights include CPI inflation (Weds), expected to fall to 1.6% on a year-on-year basis, as well as retail sales (Thurs). 
Meanwhile, in the eurozone, focus will fall on Thursday’s flash PMI figures for April, with most attention likely to be paid to the manufacturing sector after data fell to multi-year lows last month. Markets will also closely examine data for the services sector, which has been relatively resilient, for further signs of a continuing economic soft patch in the euro area. Also in focus will be Wednesday’s CPI release, though sluggish inflation is expected for the majority of the year and is unlikely to alter the ECB’s policy stance. 

Across the pond, the US calendar is slightly quieter, with the main release set to be Thursday’s retail sales numbers. Though the dataset has been volatile over recent months, expectations are for sales in the control group measure to increase at 0.4% on a month-on-month basis, a reassuring sign for the consumer-driven US economy. Other notable releases from the US include industrial production (Tues), trade balance (Weds) and building permits and housing starts (Fri).
Elsewhere, notable releases from the dollar-bloc (AUD, CAD & NZD) include CPI inflation from New Zealand and Canada alongside labour market data from Australia. Perhaps of most interest however will be minutes from the RBA’s policy meeting, where markets will be looking for any hints of an upcoming rate cut in light of the sluggish Australian economy. Another driver of the Aussie dollar, and broader market sentiment, will 1st quarter Chinese GDP figures, due on Wednesday, with expectations for growth to have softened slightly to 1.4% on a quarter-on-quarter basis.

Today's Economic Calendar

Time Currency Release Consensus Previous
1:30pm USD Empire State Manufacturing Index 6.0 3.7
3:30pm CAD BoC Business Outlook Survey
5:00pm GBP BoE's Haskel speech
6:00pm USD Fed's Evans speech