As last week closed with no high tier data hitting the wires, volatility was seen with Sterling making gains from the latest EU Referendum poll which sae the remain camp leading. Also from the US, the Fed minutes showed that the members had been talking of a second rate rise as soon as the next meeting in June. Although the Greenback did not strengthen as much as previous readings, this could be a Dollar bull run that is waiting for a more certain indication of this rate move.
The last full week of the month and data releases are light on the ground today, with the Euro zone being the only contributor to data releases this morning. Germany, the powerhouse of the single currency zone will release their Manufacturing and Services PMI figures with both set to slightly increase from the previous readings. Following this, the Manufacturing PMI and Service PMI will hit the wires for May. Market expectations are for both sectors to expand which would see Manufacturing rise again. From the US, Fed member of St Louis, James Bullard will speak in Beijing where he could re-enforce monetary policy tightening for the US this year.
The German ZEW Economic Sentiment will hit the wires and like all data seen lately, is forecast to increase to 12.1 from 11.1. The final reading of Q1 GDP for Germany is set to be confirmed at the unexpected, improved figure of 0.7%. The UK’s public sector borrowing figure is set to increase and be better than previous readings, meaning a positive for government spending. Also, the inflation report hearings from the UK will take center stage with Governor, Mark Carney and other MPC members set to testify on inflation and the current economic outlook.
Germany will be the only focus of data from the Eurozone as the Ifo Business climate is forecast to slightly see an increase to 106.9 from 10.6.6. The focus will then turn to the US as the Goods Trade Balance is released which looks at the difference in value between imported and exported goods. The gauge is expected to worsen at -60.1B from the better than expected previous reading of -56.9B. Lastly the Flash Services PMI from the US will be released.
The busiest day of the week, as the second reading of the UK’s Q1 GDP is forecast to remain at 0.4%. Brexit concerns still continue to weigh on the UK economy, which could see the figure fall lower. US data will then follow in the afternoon as the monthly Durable Goods Orders is set to increase to 0.3%. This could show support for the Dollar if a better reading is relased.
GDP again dominates the market’s focus as the US reveal the first insight into how the economy did in the first quarter of 2016. If the expected growth of 0.8% is seen, Dollar buyers will definitely be out in force, as this would be up from last quarter’s 0.5%. This would be further support for the Fed to raise rates in June as outlined last week. Fed Chair, Janet Yellen will speak later in the day in Massachusetts where markets will look for any insight or indication that the Fed are likely to act.