Market movers yesterday
- UK trade balance was the first bit of data supporting the pound. The fact that the trade balance deficit reduced by £1.45Bn carried sterling to 1.6243 against the US dollar.
- German industrial production came in flat MoM at 1.8% and grew 2.5% annually. The low of 1.3860 was short lived with EUR/USD reaching 1.3941. Any further encouragement to raise interest rates in the EU would strengthen the currency accordingly.
Market movers today
- UK GDP estimate for the first three months is the first piece of data out this morning. We have heard many estimates ranging between 0.4% -0.5% growth. Growth in GDP would be sterling positive however markets may take time to absorb as it’s only an estimate.
- Germany is expected to show an increase in trade balance. The expected increase is only €300m but any stronger and the key 1.15 level against the pound may not be unrealistic.
- ECB monthly report will pave a short term path for the single currency. An outlook of price stability and economic situation will be the topic. And as usual the markets would be looking for signals of an interest rate hike.
- UK industrial production is expected to show an increase YoY however MoM may come out 0.1% less. This is closely followed by the BoE interest rates decision which will without a doubt be more over receptive by the markets. Even though this may come out unchanged the general consensus is for it to increase by 0.75% by the end of the year.
- US Jobless claims indicator is expected to show an increase which is detrimental to the US dollar however last week’s nonfarm payroll may be the reason for an alternative outcome.
- The second bad bit of data from the US is expected in the way of trade balance which is expected to show an increase in trade deficit.