Daily Insight

It is beginning to look increasingly likely that the recent Dollar decline is looking overly exaggerated and therefore, we can expect a correction to take place at some point over the coming weeks with many analysts arguing that fair value for the currency is priced around the 1.80 - 1.84 levels. Further evidence of this was provided in trading yesterday as metal prices dropped significantly from the dizzy heights of last week with Zinc suffering it's biggest loss in over 16 years and Copper declined by the most since October 2004. Despite U.S Capital Inflows coming out lower than expected at $69.8 billion, the figure was largely ignored as the Dollar rebounded sharply against Sterling, gaining 0.5% by the close of trading and 0.7% against the Euro. After a fairly quiet day in terms of data released, there is some significant U.S data out today with the Producer Price Index expected to increase by 0.1% in April but the figures could be affected by rising oil and energy costs. In addition, the Housing market is expected to decline further in the last month with the production of new homes dropping to 1.95 million from 1.96 million in March while U.S Industrial Production is widely anticipated to drop by 0.1% in April.

With regards the Pound, the UK Housing market is expected to remain fairly buoyant in the figures released for March today as ODPM House Prices are expected to rise by 0.4% from the previous month and the UK Consumer Price Index is widely anticipated to show robust growth in April, rising by 0.4% with the year-on-year growth rate unchanged at 2.6%. There has already been some housing data released this morning in the UK with the Royal Institute of Chartered Surveyor's survey, which reported that house prices rose for a sixth consecutive month in April, fuelled by increasing demand for larger homes.

Without any significant data released in the Euro-zone yesterday, the market remained fairly stagnant but today there is the release of the ZEW survey, which analyses German economic sentiment and it is widely expected to show a moderate decline this month from 62.7 in April as the rise of global oil prices begin to weigh on the economy.

Data Released 16th May

UK 09:30 ODPM House Prices (Mar)

UK 09:30 Consumer Price Index (April)

GER 10:00 ZEW Expectations Balance (April)

U.S 13:30 Producer Price Index (April)

U.S 13:30 Housing Starts (April)

U.S 14:15 Industrial Production (April)

written by Adam Solomon