The market’s saw Sterling’s worst quarter for seven years. With data not being overly positive from the UK, the concerns of the UK leaving the EU is now showing through to the Pound. The Pound has now slumped 7% on a trade weighted basis this year already. Friday’s US labour data did not help as the Non-Farm figure posted at 215k, slightly better than market expectations. An increase was seen in average hourly earnings. Sterling hit a 16 month low against the Euro and fell almost 2 cents against the Greenback, ending the first quarter on the retreat.
Today, sees the week start off lightly as the UK Construction PMI figure is released, with forecasts for this to increase slightly to 54.3 and remain in expansion territory. From the Eurozone, the Unemployment rate will be posted and is expected to remain at 10.3%. Also the PPI data is released, which will show the price changes seen by the Producers of Goods. The consensus is for this to fall to a further -0.5% and will add to the already worrying price pressures for the single currency zone.
On Tuesday morning the RBA rate decision will be posted, followed by the Reserve Bank of Australia statement release. Rates are not expected to change from the 2% but any adjustment will see the Aussie Dollar fluctuate. The UK will release the Services PMI figure, the biggest of all the PMI’s from Britain as it makes up around 80% of the GDP figure. Market consensus is for Services to expand slightly to 53.9, but a poor figure seen here could trigger another bout of the Pound being sold. From the US their IMS Non-Manufacturing PMI is posted along with the Trade Balance.
The main data from the US will be released in the form of Crude oil inventories, which gauges the amount of stored oil by companies over the past week. If a higher number is seen this could have a negative effect on the Dollar. Fed minutes are released later this evening, where the dovish tone is expected to continue.
This will be another quiet day in relation to data releases, but with the head of the ECB Mario Draghi, speaking in Europe around midday, there could be some volatility as a reaction to Draghi’s comments. Likewise on Thursday evening, Fed Chair Janet Yellen will take center stage as she speaks at a panel discussion in New York.
The main focus of Friday will be on the UK, with the monthly Manufacturing Production figure expected to be bearish at -0.01% and Industrial production also expected to fall. Goods Trade Balance is expected to narrow slightly to -10.1B for the UK, but no doubt there will be some volatility for the Pound around these being released.