Daily Market Report 20/05/16

GBP

The pound yesterday continued its positive move higher following  better than expected retail sales figures, despite Brexit fears, consumer spending is still growing. The figure itself was printed at 1.3% against a previous of -0.5% caused GBP to rally against most other counterparts and continue showing strength following the positive Brexit poll late from Wednesday afternoon.

Although the Bank of England has said its next move on the monetary policy would be an increase in interest rates; many investors have been concerned of the systemic effects of a Brexit and the impact this could have on the UK economy. These concerns are to such extent that many market participants were beginning to price in a rate cut should a Brexit materialise – however these concerns have since been eased given the recent poll showing more favour of a vote to remain.
 

USD

The dollar yesterday strengthened following the comments of a possible rate hike in June despite Philly Fed manufacturing index coming out worse than previous at -1.8 against a previous of -1.6. Nevertheless, the unemployment claims figure came out better than previous at 278k against a previous of 294k which reinforced the FOMC comments on Wednesday of a potential rate hike, should key economic indicators and macroeconomic conditions warrant such a hike.
 

EUR

Germany and the IMF are now trying to narrow their differences over the Greek financial crisis. The IMF has always been in favour of debt relief for Greece and has warned that it would not participate in any further lending without any debt relief measures in place. It is now understood, after months of resistance Germany and the ECB are now considering debt relief as they want the IMF to be part of any potential lending program.

 

Key Announcements

All Day: G7 Meetings – meeting of finance ministers and central bankers of the worlds 7 largest economies.