The Euro hit a six-month high versus the US dollar yesterday, while Sterling remains broadly range bound in the wake of the deadly suicide bombing in Manchester.
Yesterday, the Office for National Statistics (ONS) said Public sector net borrowing (excluding public sector banks) increased by £1.2 billion to £10.4 billion in April 2017, compared with April 2016. The release came after data showed that VAT receipts in April were up by just 0.2 per cent on the same month of 2016. The borrowing figures were higher than expectations of a smaller figure of £8.8bn.
The US Dollar is treading water versus Sterling ahead of tonight’s Fed minutes.
The FOMC minutes are unlikely to surprise with the market expecting a June rate hike, any signal that suggests a more aggressive pace of tightening along the curve may change the dollars trading signals. Currently, December rate hike probability is running around 60%, so there is significant room for sentiment to shift and the dollar to firm.
Yesterday’s data from the U.S. showed that the manufacturing index fell to its lowest level in eight months, while the services sector rose to a four-month high.
Eurozone PMI surveys showed that the bloc’s growth remained strong amongst its largest economies with the biggest manufacturing sector job growth reading in the survey’s 20-year history. The composite Eurozone PMI, which tracks company growth across the euro area, came in 56.8 in May, matching April’s figure. The data came a day after the euro bounced higher when German Chancellor, Angela Merkel, called the single currency “too weak”.
Over in Greece, Eurozone authorities and the International Monetary Fund remain some way apart on its debt problems which forced Greece’s short-dated government bond yields to spike sharply. The IMF’s chief negotiator stuck to its stance that there needs to be more realism on what Athens can deliver in terms of budget cuts before receiving further bailouts.
7.00 am – German consumer confidence (June): forecast to rise to 10.4 from 10.2. Actual 10.4
3.00 pm – Bank of Canada rate decision: no change on rates expected
3.00 pm – US existing home sales (April): expected to fall to 5.65 million (annual) from 5.71 million
7.00 pm – Federal Reserve minutes: little change expected from previous FOMC minutes but markets will listen for comments on Q1 weakness, previously described as “transitory” By the FOMC
9.30 am – UK GDP (Q1, second estimate): No change expected for YoY growth at 2.1%, while QoQ forecast to be 0.3%, unchanged from the first estimate
1.30 pm – US initial jobless claims (w/e 20 May): forecast to be 238K, up from 232K a week earlier
1.30 pm – US durable goods orders (April), GDP (Q1, 2nd estimate): Durable goods expected to fall MoM from 1.7% gain in March. GDP growth QoQ is expected to be revised up to 0.9% from the first estimate of 0.7%