Morning Report: 15 May 2017

15th May 2017 By: Ranko Berich

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GBP. Despite a quiet session overnight, sterling has opened this morning slightly firmer against USD and EUR. Last week’s Bank of England events ultimately did little to change the short term fortunes of sterling, but this week’s data may have a bigger impact, with Consumer Price Index data out on Tuesday, followed by labour market data on Wednesday and Retail sales on Thursday. The three data releases together will give an up to date look at key parts of the economy, and will be especially relevant for sterling given rising inflation and falling retail sales so far this year.

EUR. Some weak US data releases gave the euro an opportunity to head back to the top of its recent trading range against the greenback on Friday. No top tier data will be released today, and the European media is focussed on the results of German regional elections on Sunday, which delivered a win for Angela Merkel’s SDP. The result in favour of Germany’s ruling party, combined with the results of France’s Presidential election, are likely to contribute to a further unwind of political risk in the Eurozone. Later this week, Eurozone Gross Domestic Product data will be released on Tuesday, followed by Consumer Price Index data on Wednesday.

USD. USD came under downward pressure on Friday after a raft of poor fundamental data releases. The Consumer Price Index and Retail Sales both missed expectations, which in the case of CPI was particularly concerning for the dollar due to the now unmistakable slowdown in inflation since reaching a peak in February. For now the Federal Reserve seems fairly confident the current slowdown in US economic activity, wage growth and inflation is a blip – although another month of poor data releases would test this optimism. This will be a slow week for US data, beginning with today’s Empire State Manufacturing index at 13:30 BST, followed by the NAHB Housing Market Index at 15:00.

CAD. The loonie has enjoyed a burst of strength this morning on the news that Saudi Arabian and Russian energy ministers said they backed extending OPEC supply cuts for crude oil until March 2018, in a bid to further support prices. Crude benchmarks have risen on the news, and taken the loonie up with them. No Canadian data will be released until Wednesday’s Manufacturing Sales, which will be followed on Friday by Consumer Price Index data and Retail Sales.

UK news

TELEGRAPH: Conservative manifesto: New rights to time off work – Tories’ 11 pledges revealed Worker’s will be given a legal right to take a year’s leave from their job to care for elderly relatives under a Conservative Government, Theresa May will announce on Monday.

GUARDIAN: Jobs market will suffer a Brexit slowdown, say experts. British workers should brace themselves for rising unemployment and falling real pay in the year ahead as the impact of a Brexit slowdown is increasingly felt in the jobs market, reports have warned.

SUN: CYBER SHAMBLES Government ministers accuse NHS trusts of ignoring warning to stop using unsupported software. FURIOUS ministers have accused hacked NHS Trusts of ignoring a major government warning 10 months ago to stop using unsupported software. The Department of Health issued the directive to all hospitals and GP surgeries in July 2016.