Daily Market Report 03/06/16


The European Central Bank kept its monetary policy on hold and interest rates unmoved, with its deposit facility at minus 0.4 per cent and the size of its quantitative easing package at €80bn a month. The European Central Bank, headed by President Mario Draghi, confirmed they will start buying corporate bonds as part of its quantitative easing package next Wednesday, as the Bank kept monetary policy on hold. 

In March, when the ECB upped its monthly purchase of bonds from €60bn to €80bn, it also said it would extend the program to include corporate bonds in a bid to push yields even further down across the single currency bloc, prompt lending and spark inflation. Draghi took the opportunity to call on UK voters to reject Brexit and choose to stay in the EU in the 23 June referendum.


Yesterday morning the UK construction Purchasing Managers' Index figure disappointed as the industry experienced the first fall in new orders in three years and edged dangerously close to slowdown territory. Construction came in at 51.2 on the index and analysts believe the forthcoming EU referendum has disrupted new order flows and the timing of client decision making in particular. Mark Carney also revealed a new plastic £5 note which will feature Sir Winston Churchill, commenting that it should stand the test of time.


New claims for US unemployment insurance fell to a five week low last week, pointing to a tightening jobs market and represents a third straight week that claims have fallen.The non-farm payroll estimate jobs figure was also positive at 173k which gives support to forecasts of a decent month of job creation in May after April's slowdown.

The steady stream of positive data suggest the economy is regaining momentum after growth slowed sharply at the start of the year, which could allow the Federal Reserve to raise interest rates later this month or in July.


Key Announcements

09:30 – GBP: Services PMI is forecast to increase to 52.5 from 52.3

13:30 – USD: Non-farm payrolls decrease to 162k from 160K 

13:30 – USD: Unemployment rate is forecast to decrease to 4.9% from 5.0%

15:00 – USD: ISM Non-Manufacturing PMI decrease to 55.4 from 55.7