Daily Market Report - 05/06/2014

 EUR:
The main topic for today is The European Central Bank potentially taking action to tackle low inflation in the eurozone and work on bloc's recovery. The latest inflation data published this week has added to the momentum of a potential change.

An unexpected fall in annual inflation to 0.5% in May, from 0.7% in April, has increased the chances of deflation, which is considered an even more serious economic threat than hyper-inflation. 

Today's announcements are also vital due to the eurozone GDP growing by just 0.2% in the first three months of 2014.

Spain's service sector expanded for the seventh month running, although the pace slowed a little last month. Firms also cut their output prices in an attempt to drive demand -adding to deflationary pressures.

Figures from France showed the service sector PMI fell to 49.1 in May, from 50.4 in April, indicating that activity across the sector fell.

USD:
US service sector growth picked up in May with PMI rising to 56.3, up from 55.2 in April.This is the 53rd month in a row that the Service sector PMI has come in above the 50-point mark, indicating expansion.

America's trade deficit has widened to its largest level in two years, with exports falling by 0.2% in April and imports rising by 1.2%. This caused the Dollar to weaken off in the afternoon session.

Meanwhile, US productivity fell at its fastest rate in six years in the first three months of 2014 and job creation across America's private sector fell to its lowest level since January.Figures show 179,000 new jobs were created by US firms in May this is a four month low.

Today:
We have had Australia Trade balance for April showing an unexpected deficit of 122 million compared to a solid surplus of 902 million in March.The main cause for the deficit was the drop in coal prices that accounted for  $361 million fall in the value of coal exports for the month of of April

Key Announcements:
12:00 – GBP - BoE interest rate decision. (Expected to stay at 0.5%).
12:00 – GBP - BoE asset purchase facility for June (expected to remain at 375B)
12.45 – EUR -: ECB interest rate decision. (Expected to fall to 0.1% from 0.25%)
13.30 – EUR - ECB monetary policy statement and press conference (Draghi)
13.30 – USD - Initial US jobless claims figures for May (expected to go to 310m from 300m)

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