Daily Market News 5 May 2011

Yesterday’s market movers

  • Sterling did not find any momentum to go back to 1.67 level since the country had a series of sluggish data. GBP/USD was trading just above 1.6450 and capped at 1.6570. UK Nationwide Housing Prices showed a down trend of the housing market in April. YoY dropped from 0.1% to -1.3% while MoM fell from 0.5% to -0.2%, both of which are worse than the market prospect. Mortgage Approvals moved up in March but is lower than the expectation. Therefore, the economy would not in approval of increasing the interest rate given the fact above.
  • UK PMI Construction April declined from 56.4 to 53.3 which is in line with the negative PMI Manufacturing data. The market consensus is expecting a negative PMI services today. We might see a dip from the sterling if it comes out as expected.
  • EU Retail Sales marked on an unpredicted decline both MoM and YoY. However, it could not stop the strong Euro going to the highest level since December 2009. GBP/EUR broke 1.11, the lowest level since March 2010.

Today’s market movers

  • UK PMI service is coming out with a negative prediction as mentioned before.
  • Germany Factory Orders are expected to come out worse than previous.
  • Last but not the least, the main point today is BOE and ECB interest rate decision (@1200 and 1245). Analysis is expecting them keep the rate unchanged at 0.5% and 1.25% respectively. Both of the central banks are supposed to be cautious according to the analysts. However, if Trichet gives out any indications of increasing the rate again in his speech this afternoon, we might see a further hike of the Euro. Similarly, if BOE releases any changing of the interest rate votes, the pound could be testing 1.67 level.