Final day of campaigning but data still at the forefront

Yesterday’s markets

6th May 2015

  • EUR French Gov budget balance
  • GBP Construction PMI
  • EUR PPI
  • CAD Trade balance
  • USD ISM Non manufacturing

The countdown for the UK election continues to tick down with the majority of the media focus purely on this event. In the meantime the soft data continues to weigh on the mind of investors, this time it was the construction PMI reading. It showed that the construction sector slowed sharply to its lowest level in 22 months. It leaves both sterling buyers and sellers in a unclear place with regards to the economy after two voting members of the BOE stated they were close to opting to raise rates at the last meeting. Economic data has been soft with the economy growing by less than expected whilst consumer spending and manufacturing start to struggle.

Meanwhile the US Dollar weakened in the afternoon as the US trade deficit surged by 43.1%, its highest level since October 2008. This is largely due to the strong US Dollar that has risen close to 12% this year. However, the ISM non-manufacturing index rose and surpassed the market expectations indicating output growth and employment strengthened at the start of the second quarter. Like the UK the US is data watching after the slightly dovish tone at last month’s FOMC meeting where the market reassessed and reduced the probability of a June “lift off” in raising rates. 

Today’s markets

5th May 2015

  • GBP Services PMI
  • EUR Retail sales
  • USD Non-farms
  • USD Yellen speaks
  • CAD Ivey PMI

Looking to the day ahead, the focus in the UK will be heavily skewed on the drive by the politicians to convince voters to vote for their party as we enter the last 24 hours. Economic data may play its part in this and the performance of Sterling with the release of the PMI services (the dominate sector in the UK). Meanwhile the same numbers will also be released from Europe as well as the Eurozone retail numbers.

The US will get an early indication whether or not we will see the employment numbers on Friday bounce with the release of the ADP employment report. In addition, eyes will be on Fed Chair Yellen who is due to participate in a panel discussion about finance, governance, and society at the Institute for Economic Thinking conference on Finance and Society. Any further clues on policy will determine the direction of the US Dollar.