Daily Insight

There was some significant data released in the UK yesterday with Business Optimism rising to its highest level in almost a year as the CIPS Manufacturing Index jumped to 54.1 in April against 50.8 last month and was well ahead of market expectations. As a result, Sterling strengthened significantly against the majors, closing above 1.4500 last night against the Euro. In addition, UK economic growth will accelerate in the second half of the year according to a survey focusing on Business Confidence, which predicts that growth will rise to 3.4% in the third and fourth quarters compared with 2.4% at the same stage in 2005. The BDO's latest business trends report suggests that inflation will come in at 2.2% in the latter part of the year, above the treasury's 2% target, signalling higher interest rates.

Ahead of the ECB rate announcement and press conference tomorrow, the Euro received a boost yesterday with PMI Manufacturing data proving stronger than expected following a sharp increase in output and new orders in the last month. There is some important data released this morning with Euro-zone unemployment expected to remain at 8.2% in March, a three and a half year low, and the Producer Price Index is also predicted to be relatively unchanged last month.

We have seen the Dollar decline significantly over the past week and we continued to trade upwards yesterday despite Ben Bernanke's vain attempts to convince the market that his comments last week regarding future monetary policy were 'misunderstood'. Nevertheless, the Dollar continued to weaken, closing above 1.8400 last night and with the U.S service sector survey expected to show a modest decline in April, we can expect further movement today.

Data Released 3rd May

EU 10:00 Unemployment Rate (Mar)

EU 10:00 Producer Price Index (Mar)

U.S 15:00 Factory Goods Orders (Mar)

U.S 15:00 ISM (Non Manufacturing) Index (April)

written by Adam Solomon