US GDP growth forecasts missed estimates by a long shot on Friday helping to keep the Pound buoyant as the EU gets tough over Brexit. Furthermore, manufacturing and inflation data released yesterday also undershot expectations leaving the dollar on the back foot for the start of a new month.
According to the Institute for Supply Management, the manufacturing PMI lost 2.4% compared to the previous month, tumbling to 54.8% while experts had anticipated only a slight decrease of 0.6%. It should be noted that although the PMI rose at the slowest pace this year so far in April, it still remains above the 12-month average of 53.6% and all 18 manufacturing industries, excluding apparel, leather and allied products industry, reported growth in April.
Even though GDP figures released on Friday last week missed forecasts, analysts suggest that the US economy will likely regain momentum in the upcoming quarters.
Over the weekend, PM Theresa May hit out at EU leaders who insist she is “in another galaxy” over Brexit talks and fought back against their demands to secure a divorce bill BEFORE we start talking trade. In an interview with the BBC’s Andrew Marr Show, the PM said her “strong and stable leadership” would take Britain through the talks to get a good deal.
Several news spinners reported that meetings with the EU Commission President Jean Claude Juncker went “very badly” and a source said: “She is living in a different galaxy. Based on the meeting, no deal is much more likely than finding agreement”.
But Mrs May insisted today: “I am not living in a different galaxy” and commented further “I think what this shows is that there are going to be times when these negotiations are going to be tough. That’s why you need strong and stable leadership… to get the best deal”.
The Euro has been resilient in the wake of the first round of the French presidential elections and now with centrist Emmanuel Macron and far-right populist Marine Le Pen heading towards a runoff on May 7th, it’s likely that the Euro will remain relatively stable.
As it stands, Macron is favoured to beat Le Pen in a week’s time and the markets have more or less priced in this outcome as well.
Last week, the Euro found further stabilisation by a lack of policy change by the European Central Bank, with April’s meeting providing little interest for the markets as President Mario Draghi and the Governing Council sat pat on current policies.
2.45 am – China Caixin manufacturing PMI (April): Expected to fall to 51 from 51.2. Actual 50.3
9.30 am – UK manufacturing PMI (April): Activity forecast to slow to 54, from 54.2. Actual 57.3
10.00 am – Eurozone unemployment (March): Expected to fall to 9.4% from 9.5%. Actual 9.5%
8.55 am – German unemployment (April): Expected to hold at 5.8%
9.30 am – UK construction PMI (April): Forecast to fall to 52 from 52.2
10.00 am – Eurozone GDP (Q1, flash): QoQ expected to be 0.5% and YoY 1.7%, from 0.4% and 1.7% respectively
1.15 pm – US ADP employment report (April): Forecast to drop to 190K from 263K
3.00 pm – US ISM non-manufacturing PMI (April): Expected to rise to 55.8 from 55.2
7.00 pm – Fed meeting: no change in policy expected; Fed expected to do 2 more rate rises this year, in June and then at some point in the final four months of the year
9.30 am – UK services PMI (April): expected to fall to 54.5 from 55
1.30 pm – US trade balance (March), initial jobless claims (w/e 29 April): trade deficit forecast to widen to $44.4 billion from $43.6 billion. Jobless claims expected to fall from 257K
1.30 pm – US non-farm payrolls (April): Expected to rise to 180K from 98K in March. Unemployment rate is forecast to rise to 4.6% from 4.5%