Market Drivers May 21, 2015
EZ PMI come in mixed
UK Retail Sales
Nikkei 0.03% Europe -0.57%
Oil $59/bbl
Gold $1209/oz.
Europe and Asia:
CNY HSBC PMI 49.1 vs. 49.4
EUR EZ Flash PMI Man 52.3 vs. 51.8
EUR EZ Flash PMI Services 51.4 vs. %1.9
GBP UK Retail Sales
North America:
USD Jobless Claims 8:30
USD Philly Fed 10:00
USD Existing Homes 10:00
UK Retail Sales blew past estimates showing strong pickup in consumer demand which helped to lift pound by more than 100 points in morning London trade.
Cable soared to a high of 1.5667 in the wake of better than expected data that saw UK Retail Sales rise by 1.2% versus 0.4% eyed. Spending rose 1.8% on a month over month basis indicating that consumers are not only willing to pay more, but to do higher volume of goods and services.
Average prices fell 3.2% versus last year with energy costs dropping the steepest at -11.5%. Some of those declines are unlikely to repeat themselves as oil prices have moderated, but the fact that the UK consumer is clearly happy to increase spending in the wake of higher wage growth and lower gas prices is good news for the UK economy and welcome sign for the BoE.
The transmission mechanism of higher wage growth and better spending is likely to expedite the normalization process for BOE and trader reacted positively to the data keeping cable well bid at the 1,5650 level. If US economic reports prove disappointing later in the day, sterling could climb to 1.5700 as the global day proceeds.
Elsewhere the EZ Flash PMI data came in mixed with Manufacturing a bit better but Services dropping slightly. PMI Manufacturing printed at 52.3 versus 51.8 eyed while Services came in at 53.3 versus 53.9 projected. Germany was laggard seeing its Manufacturing decline a bit more to 51.4 versus 52.1 the month prior. Although the overall figures show expansion, the rate of growth in EZ has clearly stalled and shows that ECB will have to remain vigilant in its QE effort to ease credit conditions further and stimulate economic activity.
Euro seesawed but popped higher in the aftermath of the news, dragged there by anti-dollar flows and remained at 1.1150 for most of the EU session. Yesterday's slightly dovish FOMC minutes continue to weigh on the greenback but today's eco data could provide the dollar with a boost if comes in above expectations. The Existing Homes number will be of particular interest to the market as it could confirm that the housing market is coming back and would therefore add to the growth in Q2 of this year.
EZ PMI come in mixed
UK Retail Sales
Nikkei 0.03% Europe -0.57%
Oil $59/bbl
Gold $1209/oz.
Europe and Asia:
CNY HSBC PMI 49.1 vs. 49.4
EUR EZ Flash PMI Man 52.3 vs. 51.8
EUR EZ Flash PMI Services 51.4 vs. %1.9
GBP UK Retail Sales
North America:
USD Jobless Claims 8:30
USD Philly Fed 10:00
USD Existing Homes 10:00
UK Retail Sales blew past estimates showing strong pickup in consumer demand which helped to lift pound by more than 100 points in morning London trade.
Cable soared to a high of 1.5667 in the wake of better than expected data that saw UK Retail Sales rise by 1.2% versus 0.4% eyed. Spending rose 1.8% on a month over month basis indicating that consumers are not only willing to pay more, but to do higher volume of goods and services.
Average prices fell 3.2% versus last year with energy costs dropping the steepest at -11.5%. Some of those declines are unlikely to repeat themselves as oil prices have moderated, but the fact that the UK consumer is clearly happy to increase spending in the wake of higher wage growth and lower gas prices is good news for the UK economy and welcome sign for the BoE.
The transmission mechanism of higher wage growth and better spending is likely to expedite the normalization process for BOE and trader reacted positively to the data keeping cable well bid at the 1,5650 level. If US economic reports prove disappointing later in the day, sterling could climb to 1.5700 as the global day proceeds.
Elsewhere the EZ Flash PMI data came in mixed with Manufacturing a bit better but Services dropping slightly. PMI Manufacturing printed at 52.3 versus 51.8 eyed while Services came in at 53.3 versus 53.9 projected. Germany was laggard seeing its Manufacturing decline a bit more to 51.4 versus 52.1 the month prior. Although the overall figures show expansion, the rate of growth in EZ has clearly stalled and shows that ECB will have to remain vigilant in its QE effort to ease credit conditions further and stimulate economic activity.
Euro seesawed but popped higher in the aftermath of the news, dragged there by anti-dollar flows and remained at 1.1150 for most of the EU session. Yesterday's slightly dovish FOMC minutes continue to weigh on the greenback but today's eco data could provide the dollar with a boost if comes in above expectations. The Existing Homes number will be of particular interest to the market as it could confirm that the housing market is coming back and would therefore add to the growth in Q2 of this year.
Recommended Content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.