Good morning and welcome to a new week which starts with ... no data out today for the UK. Despite this, William Hague’s aggressive comments yesterday regarding rising tensions between Britain and Russia made investors worry about potential damage to both economies.
Later on in the week, we see British CPI and Retail Sales data released. There are no arguments for GBP to weaken except politics and so the pound should have a good opportunity to rebound on any new hint of the British economy strength.
We saw poor results out of China, with PMI for the month of March coming in at an 8-month low, with output contracting at its quickest pace in 18 months. This suggests that China’s growth momentum continued to slow down. Weakness is broadly-based with domestic demand softening further. Beijing is expected to launch a series of policy measures to stabilize growth.
Last week saw The pound have its biggest weekly drop in four months versus the dollar as the Fed and Bank of England gave divergent signals on the future path of interest rates which lead investors to investing in the USD. Sterling fell versus all but three of its 16 major peers after Fed Chair Janet Yellen indicated U.S. borrowing costs may rise next year and the minutes from the Bank of England’s March policy meeting showed officials voted unanimously to keep its rate at a record-low 0.5 percent.The BoE minutes seem to have reinforced the notion that rates will remain at record lows into next year.
There are various PMI releases out this morning from the Eurozone, with French Manufacturing PMI out better than expected already and Germany Manufacturing and Services worse than expected. Out of the US, we have Chicago Fed reports and 3/6 month bill auction.
Posted in Daily Market News on May 30 2014