Daily Insight

The theme continued yesterday as the seemingly defenceless U.S Dollar slumped once again, hitting a new 28-year low against the Canadian Dollar and falling to yet another yearly low against the Euro, despite positive data coming out of the States with Wholesale Inventories increasing by 0.5% in March. However, it can be argued that the Dollar's still reeling from weekend reports that Iran are planning to begin trading oil in Euros, which echoes the recent sentiment felt in Russia and in Norway. With the FOMC rate announcement this afternoon, the Dollar may be given some respite as the Fed are widely expected to raise interest rates for the 16th consecutive month in under two years but speculation has increased this week that the government will begin to ease monetary tightening and pause at 5%. In addition, the U.S Treasury Budget for April will be released this evening and forecasters are anticipating that the government will stop just short of naming China as 'currency manipulator.'

Sterling has been boosted in the past week by pick-up in Manufacturing and Industrial Production in the UK and the BRC Retail Sales report has also been showing growth in the last month, jumping to 2.6% year-on-year in April, despite higher unemployment and rising oil and gas prices. There is some significant data released this morning in the UK with the Bank of England Inflation report expected to show signs of growth in the first quarter, which will lead to further speculation that the BoE will need to raise interest rates at some point this year.

The economic data coming out of Germany has looked increasingly positive in recent months but German exports unexpectedly declined by more than anticipated in March as the Euro strengthened, putting off potential investors and German Industrial Production also had the biggest drop in almost seven years despite expectations of a 0.6% increase month-on-month from February. However, it was widely anticipated that growth forecasts would be affected in Germany following extended strikes in the public service sector.

Data Released 10th May

UK 09:30 Global Trade Balance (Mar)

UK 10:30 BoE Quarterly Inflation Report

U.S 19:15 FOMC Rate Announcement

U.S 21:00 Treasury Budget (April)

written by Adam Solomon