European FX Outlook: Core UK retail sales are seen picking up in April

 

What you need to know before markets open

• Most Fed policymakers say rate hike likely needed “soon” the FOMC minutes showed.
• The US President Trump calls for a new "structure" of the US-China trade deal.
• The US State Secretary Pompeo says the US would rather walk away from the North Korea summit than get a bad deal.
• Turkish central bank raised rates by 300 basis points to put the floor under Turkish lira that was falling sharply.
• German first-quarter GDP revision is expected to confirm previous reading.
• The UK retail sales are seen rising in April after the weak reading in March. For details read my Preview here. 

Thursday’s market moving events

• German Gfk consumer confidence is expected to remain unchanged at 10.8 in June.
• German first revision of Q1 GDP is expected to see the growth rates unchanged at 0.3% Q/Q and 2.3% y/y.
• The Bank of England Governor Mark Carney delivers opening remarks at the Market forum organized by the Bank of England in London.
• The outgoing New York Federal Reserve Bank President William Dudley is scheduled to speak and participate in the panel on "Reference Rate Reform; Improving the Culture of FICC Markets" at the Markets Forum 2018 organized by the Bank of England, in London at 8:15 GMT.
• The ECB publishes its Financial Stability Review - May 2018 at 8:00 GMT.
• The UK retail sales are expected to rise 0.7% m/m while core retail sales are seen rising 0.4% m/m in April. For details read my Preview here. 
• ECB chief economist Peter Praet is delivering lunchtime keynote speech at the European Business Summit in Brussels at 10:30 GMT.
• ECB published its April meeting minutes at 11:30 GMT.
• The US initial jobless claims are seen rising 220K in the week ending May 18.
• The US existing home sales are expected to fall -0.2% m/m in April to 5.57 million.
• Atlanta Federal Reserve Bank President Raphael Bostic is expected to give opening remarks at the "Technology-Enabled Disruption: Implications for Business, Labor Markets and Monetary Policy Conference" in Dallas at 14:35 GMT.
• Minneapolis Federal Reserve Bank President Neel Kashkari is set to participate in a Q&A on New Energy Economic Reality in Bismarck, North Dakota at 18:00 GMT.

Major market movers

• The Risk-off market sentiment ruled the market on Wednesday with the US Dollar gaining massively against European majors EUR and GDP supported by weaker than expected macro data while Japanese Yen rose 1.2% against the US Dollar.
• The Euro broke to a 6-month low of 1.1685 after the combination of softer Eurozone PMI and the risk-off mood.
• Sterling fell to the lowest level since mid-December last year as the UK inflation decelerated more than expected, moving the Bank of England possible rate hike further into the future.
• Watch GBP factoring in the UK retail sales figures as well as comments from the Bank of England Governor Carney.

Wednesday’s macro summary

• French unemployment rose to 9.2% in Q1 2018 after falling 0.7% in Q4 2017 to 9.0%.
• French composite PMI fell to 16-month low of 54.5 in May from 56.9 in April as services PMI fell to 54.3 in May from 57.4 in April manufacturing PMI inched up to 55.1 in May from 53.8 in April.
• German flash composite PMI fell to a 20-month low of 53.1 in May, down from 54.6 in April. German services PMI fell to a 20-month low of 52.1 in May from 53.0 in April, while manufacturing PMI fell to 15-month low of 56.8 from 58.1 in April.
• The Eurozone flash composite PMI fell to an 18-month low of 54.1 in May, down from 55.1 in April. The Eurozone services PMI fell to a 16-month low of 53.9 in May from 54.7 in April, while manufacturing PMI fell to 15-month low of 55.5 from 56.2 in April.
• The RBA Governor Philip Lowe said Australia, China together can be “strong voice” for the importance of open international trade, effective regional co-operation. It is important we avoid escalating political issues with China, we need mechanisms for de-escalation, Lowe said.
• The UK CPI inflation decelerated to 2.4% y/y in April from 2.5% y/y in March while core inflation decelerated to 2.1% y/y in April, confirming the Bank of England’s dovish stance. 
• ECB Executive Board Member Benoit Coeure said the Bank is not worried about growth slowdown, but it is increasingly confident that inflation will rise-Die Zeit.
• CBI realized sales rose unexpectedly strongly to 11% in May, up from -2.0% in April.
• The US new home sales fell 1.5% m/m in April to 662K.
• Czech National Bank Governor Jiri Rusnok said the dip in the economic growth probably means we do not need any fast monetary tightening.
• The Eurozone consumer confidence remained broadly unchanged falling 0.1 to 0.2 in May.
• Cleveland Federal Reserve President Loretta Mester said for German newspaper Boersen Zeitung that if inflation does not pick up as expected, that's an argument to wait longer and be more cautious about rate hikes. 
• The FOMC meeting minutes confirmed the gradual path of monetary policy normalization with next rate hike in June.