Daily Market Report - 04/06/2014

It is a big day tomorrow in the Eurozone where it is widely expected interest rates will be cut and a stimulus package will be introduced By the European Central Bank to ward of the threat of deflation.

We have seen safe haven flows the the USD over the last week and if these policies are introduced by the ECB tomorrow we could see further USD strength. If you would like to discuss this further please do not hesitate to contact your dealer.


EUR:
Unemployment in the Eurozone improved from 11.8% to 11.7% in April, while the wider measures across the European Union fell to 10.4% from 10.5%.With the lowest unemployment rates that were recorded in Austria (4.9%), Germany (5.2%) and the highest was recorded in Greece (26.5% and Spain (25.1%).
 
The number of people registered as out of work in Spain fell by 111,916 people last month the biggest fall for a May on record. This is a good sign the Spanish economy is recovering but this figure does not include the long term unemployed.
 
Inflation across the Eurozone also slumped to just 0.5% in May, from 0.7% in April.food, tobacco and alcohol inflation fell sharply in May - down to just 0.1% in May compared to 0.7% in April there was also no inflation at all in non-energy industrial goods
 
This figure makes it more likely that the European Central Bank will act on Thursday by either cutting interest rates or introducing a negative deposit rate for banks.

GBP:
House prices in the UK have broken through their previous high and the average cost of a home is now higher than ever before.Nationwide reported a 13th consecutive month of house prices, bring the cost of an average UK home to £186,512.

This figure is higher than the previous peak reached in October 2007.However at 0.7% increase in May the monthly rate of inflation reported by Nationwide was lower than the 1.2% recorded in April
 
Britain's construction sector fell to its slowest level in seven months in May, as builders experience bottlenecks and supply shortages. But at 60.0, the UK construction PMI still showed solid growth and is positive for the UK economy.
 
Today:
We have PMI Services figures across a number of countries in the Eurozone as well as the UK. Q1 GDP is also set to be released in Europe and is expected to remain unchanged at 0.2%
 
Key Announcements:
09:30 - GBP - PMI Services (May) expected to be slightly lower at 58.2
10:00 - EUR - Q1 Eurozone GDP expected stay flat at 0.2%
13:30 - USD - Trade balance for April expected to be slightly higher deficit of 40.80 Billion

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