Daily Insight

The market remained fairly stagnant yesterday following a second successive day without any significant data released either in the UK or the States but we can expect some market movement over the course of the day with the CBI Monthly Trends survey released this morning and forecasters are anticipating a moderate improvement in May following a pickup in UK Manufacturing and Industrial Orders in the past month. Sterling may rally against the majors if the figure comes out slightly above market expectations and we will be focusing on the first quarter GDP data released tomorrow to give us an indication of whether growth in manufacturing and the service sector will be able to sustain the year-on-year growth rate at 2.2%.

In recent months, the cooling U.S Housing Market has come under pressure from the Federal Reserve's prolonged campaign to stem the threat of rising inflation by raising interest rates continually for the past 16-months as the economy grew at a much faster rate than anticipated. However, with U.S interest rates currently at 5% consumers are finding it increasingly difficult to afford a mortgage and that sentiment is reflected in the Sales of New Homes, which is expected to decline by as much as 6.4% last month. In addition, U.S Durable Goods Orders is also released this afternoon in the States and forecasters are anticipating a slight decline from the previous month as the gains in orders for February and March combined showed the biggest increase since comparable records began in 1992.

With regards the Euro, there is some significant data released this morning in Germany with the Ifo Index expected to show a moderate decline from the 15-year high in April as business confidence in Germany suffered, primarily due to a sharp rise in global energy prices and a significantly stronger currency. The Index rose to 105.9 last month, which was the highest level since 1991 and coupled with a dramatic rise in German Producer Prices last week, we can expect the Euro to show further strength if confidence in Europe's largest economy continues to remain at high level.

Data Released 24th May

UK 11:00 CBI Monthly Trends Orders (May)

GER 10:00 Ifo Business Climate Index (May)

U.S 13:30 Durable Goods Orders (April)

U.S 15:00 New Homes Sales (April)

written by Adam Solomon