Daily Market Report 19/05/16

GBP

The pound jumped amid evidence the campaign to keep Britain inside the European Union is extending its lead. An opinion poll by the Evening Standard newspaper and Ipsos Mori put the “Remain” camp’s lead at 18 percentage points. That’s after an ORB/Telegraph survey earlier this week showed 55 percent of respondents in favour of staying in the EU versus 37 percent wanting to leave.

Yesterday we also had more positive employment data in the UK with 31.58 million people in work, up 44,000 from the previous quarter taking the employment rate to a record high of 74.2%. However the Office for National Statistics (ONS) has said the jobs market could be "cooling off". David Freeman, a senior statistician at the ONS stated that "The employment rate has hit another record high, but this time the increase is quite modest, with unemployment very little changed and further evidence the jobs market could be cooling off."

USD

The Federal Reserve is likely to give US interest rates another hike next month, according to the minutes of its latest policy meeting published this evening. Unless the economy is blown off course, The US Fed is gearing up to raise interest rates for only the second time since the financial crisis when they next meet on 14 June.

The Fed's Federal Open Market Committee (FOMC) "judged that if incoming data was consistent with economic growth picking up in the second quarter, labour market conditions continuing to strengthen, and inflation making progress toward the FOMC's two percent objective, then it likely would be appropriate to increase the target range for the federal funds rate in June".
 

EUR

The Eurozone fell back into deflation in April, as prices dropped by 0.2% over the year, official figures out yesterday showed. Falling transport and energy costs pushed the headline rate of inflation down from zero per cent in March. It makes the second month of deflation this year for the Eurozone after oil price volatility in February sent the index crashing down.
Consumer confidence is rising across the Eurozone, with the unemployment rate of 10.3% is at its lowest level since August 2011, and GDP figures for the first quarter, while recently devised down, are still ahead of every advanced economy. Oil prices are hitting a six month high meaning there are signs that demand should hold up and prices could head north in the coming months.

 

Key Announcements

09:30 – GBP: UK Retail sales (May) expected to increase to 0.6% from -1.3%

12:30 – EUR: ECB Monetary Policy Meeting 

13:00 – USD: Initial Jobless Claims expected to fall to 276K from 294K