Daily Insight

In the past 24hrs, Sterling has extended its biggest weekly gain against the Euro since December last year as UK Factory-gate prices rose by the most in seven months in April. Ahead of the UK inflation report tomorrow, speculation has continued to grow that the Bank of England
will need to lift interest rates in the coming months as growth in the service sector and manufacturing industry begins to accelerate. UK output prices rose for the fourth consecutive month in April and grew 0.6% from March. Coupled with that, Industrial Production is also expected to rise by 0.2% in a report released on Thursday and the UK service sector has expanded at its fastest pace in more than two years. There has been some significant data already released this morning in the UK with the British Retail Consortium's monthly report on Retail Sales, which is expected to remain relatively robust following a 1.6% increase in March despite consumer's suffering higher utility bills and the UK unemployment rate being at it's highest level in almost 3 years.

The Euro continues to thrive following the ECB press conference last week and we can expect further evidence that the euro-zone economy is beginning to gain momentum into the second quarter as German Factory Orders rose significantly year-on-year in March, increasing to 12.4% from 10.6% in February. In addition, German Industrial Production, released this morning, is also predicted to show improvement with forecasters anticipating a rise from 6.4% in February to 7% in March.

In recent weeks, the Dollar has declined dramatically, dropping from 1.7250 this time last month to trade above 1.8700 as the high following the U.S job report last Friday. Since the Federal Reserve chairman, Ben Bernanke, gave the biggest hint yet that interest rates will be held after two more rises, the Dollar has been in rapid retreat and we can expect the market to focus on other aspects of the economy once the current rate cycle comes to an end. The U.S Trade Balance is released this Friday and forecasters are predicting that the Deficit has widened to $67.3 Billion for the month of March as imports continue to rise following record oil prices in the last month.

Data Released 9th May

UK 00:01 British Retail Consortium Sales Survey (April)

GER 11:00 Industrial Production (Mar)

U.S 15:00 Wholesale Inventories (Mar)

written by Adam Solomon