Key Points:
• UK job market starting to turn?
• All eyes on debt ceiling talks today
• Eurozone GDP in focus
Recap:
GBP finished largely higher yesterday across the G-10 retracing 50% of the losses suffered post the BoE meeting last week. However this morning we’re seeing GBP starting the day lower after job numbers disappointed. The unemployment rate ticked up to 3.9% from 3.8%, wage numbers eased to 5.8% and payroll numbers showed -136,000 versus an expected 25,000. Markets have eased additional rate hike expectations across this year by about 5bps but it’s worth noting ahead of the next BoE meeting we have one more set of job numbers out as well as two sets of inflation numbers. So whilst the argument towards the BoE pausing additional hikes next month may be building, it may be a bit premature to draw a firm conclusion from today’s numbers.
Despite comments from Fed Bostic pushing back against rate cuts this year as well as Kashkari stating that the Fed has more to do in its fight against inflation, there was minimal impact on money markets’ pricing on interest rates and USD declined marginally across the G-10. Equities largely finished higher which likely weighed on demand for USD.
Markets
The EUR will be in focus today with the latest ZEW survey and GDP figures for the first quarter of this year. The EU Commission raised their forecasts for growth this year from the eurozone, so it will be interesting to see if today’s numbers come in better than expected. Higher growth will likely lead to markets seeing the ECB staying on their rate hike path and should see EURUSD bounce off it’s uptrend support (see below).
Talks will resume today over the US debt ceiling and continued doubts of a default could see safe haven flows into USD and JPY. Also, today sees the April retail sales report which will give a measure of the confidence of US consumers.
Further easing of inflation in Canada could lead to rate cuts being priced in this year and lend to weakness on CAD. GBPCAD has been trading in a very tight range over the last 6 days and a lower print on inflation could break us out.
Equals Market Analysis– 16th May 2023
Today’s Market Rates
Today’s Interbank Rates at 09:34 am against GBP movement.
GBP>EUR – 1.1496
GBP>USD – 1.2523
EUR>USD – 1.0894
GBP>CAD – 1.6848
GBP>AUD – 1.8718
GBP>SEK – 12.931
GBP>AED – 4.5975
GBP>HKD – 9.8150
GBP>ZAR – 23.920
GBP>CHF – 1.1180
Today’s Highlights
- EUR Gross Domestic Product s.a. (QoQ)(Q1)
- EUR Gross Domestic Product s.a. (YoY)(Q1)
- USD Retail Sales (MoM)(Apr)
- USD Retail Sales Control Group(Apr)
- CAD BoC Consumer Price Index Core (YoY)(Apr)
- EUR ECB’s President Lagarde speech
- JPY Gross Domestic Product (QoQ)(Q1)
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