- Volatile day as data confounds forecasters
- Sterling recovers lost ground
- US Federal reserve is today’s focus
It’s May Day and therefore many countries are celebrating Labour Day but Brits will have to wait until Monday before they can get their Maypoles out and jig around with ribbons. I certainly will.
Data Shocks ignite volatility
There were some interesting pieces of data yesterday. One was the surprise improvement in the US housing market and then an equally surprising contraction in Canada’s economy, when the markets were expecting growth. The Third was an improvement in the Eurozone GDP growth. That was definitely out of step with recent data releases, so may be revised in a month. And then, overnight, we heard that Australia’s manufacturing confidence was remarkably stronger in April.
Unsurprisingly, the markets were much more vibrant yesterday than they have been for a week or so. The Sterling – US Dollar rate pushed back above $1.30 at the interbank level and the Sterling – Euro rate climbed back above €1.16. The pound got another fillip this morning when Nationwide reported a rise in house prices and the manufacturing PMI has the potential to deliver an improvement on the pessimistic forecasts that are doing the rounds.
There is not a lot from the Eurozone today other than an uptick in Hi-Viz vests in France and the likelihood that A&E an police stations will be very busy across Europe, where May Day protests often turn into riots or discord.
US Federal Reserve holds the key but will, it unlock liquidity
The US markets will deliver a slew of manufacturing statistics and indices but the Federal reserve’s interest rate decision and statement will be the most closely followed event. The pace of growth is slowing in the US, so anything that points to the Fed’s plans to avoid recession is always going to be positive. The USD is poised to react in either direction dependent on whether the Fed is near to loosening the monetary supply (USD weakness expected) or is sanguine about the slowdown stats (USD strength to ensue).
Veggie Pigs – who’d have thought it
And has anyone else thought it odd that Marks and Sparks have gone completely veggie with their Percy Pig sweets? Surely if they are to be vegetarian, they shouldn’t be pigs at all. Percy Parsnip would make more sense or Sally Sprout or Carrie Carrot maybe. I am sure M&S would love to hear your suggestions. Maybe they could make the Percy Pigs bacon flavour for those of us who aren’t veggie.