Daily Market Report 12/05/2014

GBP

Early in the trading day on Friday we had a number of figures released in the UK.The UK deficit of trade in goods and services was £1.3 bn in March 2014, compared with a deficit of £1.7 billion in February 2014.  Manufacturing output which accounts for around 10% of the economy also grew 1.4% in the first three months of 2014 this is way above expectations and the best quarter since 1999. Total production, which includes mining, quarrying and manufacturing, fell 0.1% on the previous quarter. This headline figure caused a sell off of Sterling and some profit taking after the strong rally over the last couple of weeks.

Later on during Friday’s trading the National Institute of Economic and Social Research believes that the recovery in the UK economy is continuing, releasing their Q1 GDP growth estimate at 1%, above market analysts’ expectations of 0.9% growth.

CAD 

The Canadian dollar weakened the most in seven weeks after employment unexpectedly declined for the second time in three months in April, boosting bets the Bank of Canada may lower interest rates to support economic growth.  The currency dropped from almost the strongest level against the U.S. dollar in four months as employment fell by 28,900 in April and the participation rate declined to the lowest in more than 12 years

EUR

Inflation in Greece continues to fall at a steady pace, as wage cuts and unemployment take their toll. Data showed that prices were down 1.6% in April 2014 compared to April 2013. However some more positive news for Europe as Portugal's unemployment rate has fallen for the fourth successive quarter Official data showed that the jobless rate was 15.1% in March, down from 17.5% a year earlier.

This week the focus will be on inflation figures. On Wednesday  Mark Carney delivers his quarterly inflation report, which should give investors a clearer indication of when the Bank of England will look at raising interest rates.Then on Thursday the Eurozone will announce their inflation figures for April, if inflation figures continue to disappoint this may force the ECB to take action to bring inflation up to the 2% target level.

Key Announcements:

18:00 – USD – The US Government releases their monthly budget statement.