Morning Report: 9 May 2017

9th May 2017 By: Ranko Berich

GBP Sterling saw some volatility overnight against USD and EUR, ultimately ending up slightly weaker vs USD and up vs the euro. Data from the British Retail Consortium overnight showed that Easter was a good month for the beleaguered UK retail sector, which reported an increase in the value of goods sold in April compared to a year ago, due to the timing of this year’s holiday. No further sterling data will be released today.

EUR Buy the rumour, sell the fact was an apt description of yesterday’s euro trading, as the single currency saw broad weakness in the wake of Macron’s victory in Sunday’s French election. French banks were closed yesterday for Victory day, but data was released elsewhere in the eurozone, as German Factory Orders expanded 1.0% in March. The Sentix Investor Confidence index rose to 27.3, reflecting a substantial improvement among the surveyed investors and analysts compared to last month’s reading. This morning’s data has included a smaller than expected contraction in German Industrial Production and a smaller than expected German Trade surplus, neither of which have had a large effect on the euro.

USD The US dollar had a good start to the week yesterday against GBP and EUR, despite the supposedly euro-postive results of Sunday’s election. Yesterday was a quiet day data wise, but today will see the release of several relevant data points, beginning with the NFIB Small Business Index at 11:00 BST, which is expected to fall from last month’s multi year high. Later in the afternoon at 15:00 the Job Openings and Labour Turnover Summary will be released, with Job Openings an important indicator of the demand for workers in the economy, alongside Wholesale Inventories and EBD Economic Optimism. At 21:15 the Federal Reserve’s Robert Kaplan will speak.

CAD finally had an uneventful session yesterday and traded sideways, after a week of drama last week that saw the loonie stage a late rally against the greenback. Yesterday’s Housing Starts fell short of expectations, and today at 13:30 BST monthly Building Permits data will be released.

UK News

  • FT. Easter brings ‘brief respite’ for UK retailers, says industry body April sales grew 6.3% but rising prices likely to squeeze high street. Easter provided a “brief period of respite” for UK retailers with healthy sales growth in April, but rising prices are likely to renew the squeeze on the British high street in the second quarter, according to new industry figures published on Tuesday. The British Retail Consortium estimated that the value of goods sold in its members’ stores rose 6.3 per cent in April, compared with the same month in 2016. However, most of the rise was the result of Easter falling in mid-April this year, compared with late March last year.
  • Reuters. British exporters see few long-term gains from sterling windfall With 85 percent of its customers outside Britain, Sheffield-based Gripple should be cheering the plunge in sterling since last year’s vote to leave the European Union, which means every overseas sale brings in more pounds than before. British exporters are enjoying a Brexit windfall as a result of the pound’s fall, which has helped push up the value of the goods they export by 15 percent since a year ago. Some hope the boost to manufacturers will foster a rebalancing of the economy, which has long relied on domestic consumers.