Daily Insight

We witnessed a significant day of market movement yesterday as Sterling came under pressure, particularly against the Euro, following the release of the minutes of the Bank of England's last MPC meeting and as widely expected, policy makers voted 7-1 in favour of keeping UK interest rates at 4.50%. Once again, David Walton was the only member of the eight strong committee who voted for a rise in rates and Sterling reacted poorly against the majors as new member David Blanchflower, who was expected to join the chorus for higher interest rates, voted for a no change in UK monetary policy. There is some significant data released in the UK today with the CBI Industrial Trends survey and it is widely anticipated that the recent pickup in manufacturing will show sustained confidence in the figures released this morning, although the increased cost of raw materials and higher input prices could have a negative impact on orders.

The Euro strengthened significantly against the majors yesterday, rising 0.5% against the Pound to push the rate back under 1.4600 following comments from the ECB chairman, Jean-Claude Trichet, who reiterated that euro-zone economic growth was becoming more sustained into the second half of the year. The single currency may make further gains this morning as euro-zone industrial orders are expected to show positive signs of growth in April with forecasters are anticipating a rise of 1.8% from March. In addition, Italian Consumer Confidence is released this morning and is expected to remain unchanged in June.

The Dollar has been hampered in recent sessions as the threat of higher interest rates begins to wane on consumer sentiment and the currency sustained further losses against the Euro yesterday, dropping 0.6% to close around 1.2650. There is some significant data released in the States this afternoon with the weekly jobless report widely expected to rise to 305,000 from 295,000 last week and provides further evidence that the expansion of the U.S labour market is cooling in the second quarter, another factor that will have a damaging affect on consumer spending and retail sales. In addition, the Dollar may come under further pressure with an index of leading U.S indicators widely anticipated to show a drop of 0.5% in May, providing yet another indication of slowing economic growth.

Data Released 22nd June

UK 10:00 CBI Industrial Trends (June)

EU 09:00 Industrial Orders (April)

U.S 13:30 Initial Jobless Claims (w/e 17th June)
U.S 13:00 Leading Indicators (May)

written by Adam Solomon