Euro and Sterling in freefall

Yesterday’s markets

20th May 2015

  • GBP CPI
  • GBP Monthly PPI
  • EUR German ZEW
  • USD Building permits

The Euro fell sharply yesterday morning after ECB board member Benoit Coeure announced that the ECB would be “front loading” asset purchases in May and June given the likely low market liquidity in the summer months. The single currency fell below a key psychological level against the Dollar after this news. Keeping with the Euro news, Greek leaders expressed optimism yesterday despite the downbeat headlines of the country’s future which were released over the weekend. Both Finance Minister Varoufakis and PM Tsipras are reported to have said a deal is close, possibly within the week. All eyes on will be on the Grexit leading up to their last IMF payment in June.

The U.K. inflation figure fell to a negative 0.1% yesterday for the month of April, the first time it has fallen below zero since records began. Expectations were for CPI to remain flat as the price of oil, food and energy remained little changed between March and April. The reason for the dip below zero was driven by the lower air and sea fares seen over the Easter period. BoE Governor Mark Carney did state in last week’s inflation report that deflation would be seen before a rise in the consumer price index. However, lower prices are seen to be relatively positive for the U.K's growth, as it boosts real consumer spending power and helps to drive the British economy.

Today’s markets

19th May 2015

  • EUR German PPI
  • GBP Bank rate vote
  • GBP Asset purchase facility
  • USD Crude oil inventories
  • USD FOMC Meeting minutes

Today’s focus will be on the Bank of England voting pattern with the release of the BoE meeting minutes. In the previous meeting minutes it was revealed that two members were close to voting for a hike in interest rates. Meanwhile across the pond, the FOMC minutes are set for release. These will be heavily scrutinised as investors look for clues on whether the door for a June rate hike is still ajar given the poor run of data.