Daily Insight

Yesterday represented a significant day of market movement and the Pound remained solid against the Euro and the Dollar despite weak UK unemployment data for May where the number of people claiming for jobless benefits rose to the highest level in over 4 years as the economic slowdown in the second half of last year and higher global energy costs begins to have a damaging impact on the economy. UK jobless claims increased by 5,800 from April to 950,900, which was above market expectations and the highest level since April 2002. However, the number of employed people in the UK actually climbed by 130,000 in the last month to 28.94 million, which is the highest since records began in 1971 and growth in UK average earnings increased to 4.6% in the 3 months to April, which was largely in line with expectations. There is some significant data released in the UK this morning with Retail Sales widely expected to show signs of growth in the figures released for May as World Cup spending reached it's peak and the consensus forecast is for the annual rate to increase to 3.6% in May but higher petrol prices and rising utility bills will continue to hamper consumer spending.

In the past 48hrs, there has been a sparse supply of economic data released in the Euro-zone and therefore the rate against Sterling has remained fairly stagnant holding around 1.4630. There is some significant data released in the Euro-zone this morning, which could potentially give the Euro a much needed boost with the Core measure for inflation widely anticipated to increase for a third consecutive month in May with the headline rate expected to rise to 2.5% primarily due to higher oil prices. After the ECB chose to raise interest rates by a quarter-point last week, there will be renewed calls for the central bank to bring inflation under control and therefore signal a further rate increase in the coming months.

The U.S Dollar has enjoyed a decent rally in recent weeks and off the back of a seven day winning streak against the Euro and the Pound, the rate plunged by half a point yesterday, dropping 0.7% against Sterling and falling 0.6% against the Euro after achieving a six-week high overnight. The Dollar has been gaining in the past couple of weeks as rising inflation has prompted investors to shift their expectations of a June rate hike and yesterday provided yet more evidence that the Federal Reserve will need to bring U.S inflation under control as consumer prices rose by 0.3% in May, which was slightly above market expectations. However, the Dollar dropped in the aftermath of the Consumer Price Index and it is thought that although U.S rate rises have boosted the dollar in recent months, there is a concern that higher interest rates will begin to curb economic growth. There is an abundance of data released in the States this afternoon, most notably Industrial Production, which is widely anticipated to show modest signs of growth in May and net capital inflows are expected to increase to $72.5 billion in April.

Data Released 15th June

UK 09:30 Retail Sales (May)

EU 10:00 Harmonised CPI (May)

U.S 13:30 Empire State Index (June)
U.S 13:30 Initial Jobless Claims (w/e 10th June)
U.S 14:00 TICS Net Capital Inflows (May)
U.S 14:15 Industrial Production (May)
U.S 17:00 Philly Fed Index (June)

written by Adam Solomon