Morning Report: 2 June 2017

2nd June 2017

GBP Sterling had an uneventful day yesterday, as GBPUSD closed flat compared to open and GBPEUR moved marginally higher. Yesterday’s fundamental data included another month of price falls in the Nationwide House Price Index, marking the first consecutive three month run of price declines since 2009. The Manufacturing Purchasing Managers Index fell to 56.7, a marginal decline from previous levels. Today at 09:30 BST the equivalent index for the Construction sector will be released.

EUR The euro pared Wednesday’s gains yesterday, as the possibility of early elections in Italy continues to be discussed in news headlines. Elections have been tabled by the ruling Democratic party for as early as Autumn, raising the prospect of yet more political uncertainty for the eurozone. Manufacturing Purchasing Managers Indices were solid across the euro zone yesterday, and little fundamental data will be released today, apart from eurozone Producer Prices at 10:00 BST.

USD The weighted US dollar Index, DXY, rallied slightly yesterday, having reached an area of support around the 97 level that market participants have been reluctant to trade the dollar below previously. Donald Trump withdrew the United States from the historic 2015 Paris climate agreement, to universal condemnation from world leaders and high profile business leaders. Interestingly enough, Trump made explicit mention of the tax bill he intends to pass through congress during his speech, suggesting that this potentially inflationary change in fiscal policy may indeed see the light of day. A raft of data was released yesterday, but largely overshadowed by the unfolding political story. Highlights included a solid print for the ADP Non-Farm Payrolls estimate, a higher than expected number for Initial Jobless Claims, and a big fall in Construction Spending. Today at 13:30 BST, the Non-Farm Payrolls report will be released. After last month’s disappointing wage figures, the focus will be on if pay growth begins to accelerate again.

CAD The loonie saw some intraday moves but ultimately had an uneventful day yesterday. Crude Oil Inventories fell sharply in North America, according to official EIA data in the United States, marking the eight straight week of declines in stockpiles. In the meantime, OPEC reported a net increase in production, driven by members exempt from recent production restrictions. Today at 13:30 BST Trade Balance and Labour Productivity data will be released.

UK news

  • Telegraph: Theresa May has been accused of “cowardice” for failing to sign a joint statement with other European leaders expressing regret at Donald Trump’s withdrawal from the Paris climate change agreement.
  • Guardian: ‘A grim reality’: concern over longer waits for NHS operations. An increasing number of patients are having to wait more than six months for an operation in hospital, official NHS figures show. The number of people in England being forced to wait that long has almost trebled in the past four years, from 45,054 in March 2013 to 126,188 in March this year – a 180% rise.
  • Reuters: May’s lead falls to 3 percentage points, YouGov poll shows a week before election. British Prime Minister Theresa May’s gamble on a snap election was under question on Thursday after the latest opinion polls showed her Conservative Party’s lead was dwindling just a week before voting begins.