Data Back in Driver's Seat

Sterling has picked up from Thursday's lows. Central bank speakers are in focus today.

Previous Day's Market Highlights

There was little in the way of economic data yesterday, leaving central banks in focus. The ECB’s Francois Villeroy de Galhau indicated he sees bond purchases winding down this year and interest rates rising next year; the comments were taken as slightly hawkish and saw some euro strength. Fed member Bullard, a non-voter this year, remained dovish. The RBA meeting minutes, out overnight, were relatively cautious and put some pressure on the Aussie dollar.
 
Sterling-euro held above 1.13 and sterling-dollar above 1.35. Euro-dollar initially made gains above 1.19 but gave up those gains after failing to break 1.20.  

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1361 1.1600 1.1302 2.57%
GBP/USD 1.3555 1.4376 1.3460 6.37%
EUR/USD 1.1931 1.2414 1.1822 4.77%
GBP/AUD 1.8033 1.8478 1.7909 3.08%
GBP/NZD 1.9615 1.9755 1.9247 2.57%
GBP/CAD 1.7353 1.8039 1.7224 4.52%

Today's Market Highlights

The UK releases March labour market data (09:30 BST), its first major economic releases after the Bank of England kept interest rates on hold last week. Any signs of rising wage growth could be a positive for the pound, but another data disappointment risks renewing sterling weakness. Either way, it’s worth keeping an eye on as the BoE looks for signs of improving data before raising interest rates.
 
Shortly thereafter, we have the second estimate of Q1 Eurozone GDP (10:00), which is forecast to be unrevised at the slower 0.4% quarter-on-quarter and 2.5% year-on-year. This could have limited impact on the euro unless there are any revisions, but slower economic growth is worth noting as the ECB considers the timing of monetary policy normalisation.
 
In the afternoon, US April Retail Sales are forecast to be mixed (13:30). A rise in core sales could support the dollar. After slower Q1 growth, investors will be watching for a sign of a pick-up in Q2 data.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:30 GBP Average Earnings inc Bonus 3M/Yr (Mar) 2.6% 2.8%
09:30 GBP Average Earnings exc Bonus 3M/Yr (Mar) 2.9% 2.8%
09:30 GBP ILO Unemployment Rate 3M (Mar) 4.2% 4.2%
09:30 GBP Claimant Count Change (Apr) 7.8K 11.6K
10:00 EUR German ZEW Economic Sentiment (May) -8.2 -8.2
10:00 EUR Eurozone ZEW Economic Sentiment (May) 2.0 1.9
10:00 EUR Second Estimate GDP s.a. QoQ (Q1) 0.4% 0.4%
10:00 EUR GDP s.a. YoY (Q1) 2.5% 2.5%
13:00 USD Fed's Kaplan Speaks
13:30 USD Retail Sales MoM (Apr) 0.3% 0.6%
13:30 USD Core Retail Sales MoM (Apr) 0.5% 0.2%
NZD Global Dairy Trade Price Index -1.1%
17:45 USD Fed's Williams Speaks
02:30 AUD Wage Price Index QoQ (Q1) 0.6% 0.6%
02:30 AUD Wage Price Index YoY (Q1) 2.1% 2.1%

Caxton