- UK unemployment holds at 5.1%
- FOMC meeting minutes tonight
The US Dollar rallied yesterday on the back of continued improvements in economic data. Housing starts, industrial production and inflation all came in higher than forecast and following on from Friday’s jump in retail sales confirming that the US economy continues to expand. The Dollar was also buoyed by comments from Federal Reserve Bank officials who were speaking last night ahead of tonight’s FOMC minutes. San Francisco Fed president Williams reiterated that improvements in US data made a good case for an increase in US interest rates in the next few meetings, with the possibility of two or three interest rate hikes this year.
Atlanta Fed president Lockhart agreed with this assessment, as did the Dallas Fed president. With the odds of a June rate hike jumping from 4% to 15% tonight’s FOMC minutes will be watched closely for more clues as to the timing and pace of the US monetary tightening. July now looks like a strong contender for an increase in US rates after their hike late last year.
The Pound has continued to shrug off poor economic data whilst a picture of slowing growth emerges (manufacturing, industrial and service PMI data all dropping), the market is focusing on Brexit and the Pound rallies on any indication that the Remain vote are gaining. Yesterday’s inflation data disappointed with consumer price inflation rising only 0.1% in April against market expectations of a 0.3% increase. We’ve just had jobs data released with UK unemployment holding at 5.1% and a slight uptick in average earnings which will be welcome by the Bank of England policy makers.
For the remainder of the day we’ve got Eurozone inflation numbers and then the all-important FOMC minutes. Overnight Australian unemployment data is released, the Aussie has continued to weaken on the back of stronger US data, as the carry trade continues to slowly unwind with GBPAUD trying to break up through the top of the channel at 1.9800, tomorrow’s UK retail sales data will be keenly watched.
Today's Major Economic Releases
||UK: Average earning index
||UK: Unemployment rate
||EU: Final CPI y/y
||Canada: Foreign securities purchases
||US: Crude oil inventories
||US: FOMC meeting minutes
Daily Currency Insight by Alastair Sweetman
Daily Currency Analysis with Chris Verdet
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