Last week was dominated by hawkish central bank speakers, particularly from the UK and Eurozone. Bank of England Governor Mark Carney signalled the BoE could be looking at raising interest rates in the coming months. He stated ‘some removal of monetary stimulus is likely to become necessary’ causing sterling to push back up towards the pre UK election levels. The hawkish statement contradicts what he said last week in his Mansion House speech, that now was not the time to be raising rates. BOE chief economist Andy Haldane also weighed in on Carney’s hawkish remarks, adding that the BoE “need to look seriously at the possibility of raising interest rates to keep the lid on those cost of living increases”.
ECB President Mario Draghi last week strengthened the Euro with a flurry of hawkish comments. Draghi stated that the current feel of global uncertainty has urged the ECB to remain in a more patient position in terms of its monetary stimulus. Draghi went on to reassure that they believe the policy is currently working to the best of its ability and they are prepared for the upcoming recovery period for the Euro “all the signs now point to a strengthening and broadening recovery in the euro area”.
Manufacturing PMI dominates today’s calendar. UK manufacturing is forecast slightly worst than the previous reading, however still expected to post above 50, indicating expansion territory. In the afternoon, the US release their manufacturing numbers and BoE member Andy Haldane addresses the market.
On Tuesday, the US will be in observance of Independence Day. Back in the UK, the second of the three PMI figures will be released. Construction PMI is expected to post 55.2.
The third and final reading of UK PMI is released today. Typically this piece of data has the greatest impact in the market as the tertiary sector accounts for nearly 80% of UK output. Services PMI is forecast at 53.5, in line with May’s reading.
Thursday’s economic docket is jam packed with high tier data. Firstly, we gain an insight into Friday’s non-farm payrolls as the ADP private jobs number is released. Shortly after, US jobless claims hit the wires and the all important ISM non-manufacturing PMI is posted from the States, forecast at 56.6
Friday will be the busiest day of the week with the UK manufacturing production figure and average hourly earnings, unemployment rate and non-farm employment change out from the US. The Fed will also be releasing their monetary policy report and the G20 leaders will be meeting for the first day of their meetings in Hamburg.