Despite the negative rhetoric surrounding Greece we saw the Greenback lose ground as institutions reversed Dollar positions. Soft data released from the US did not help the situation as jobless claims, building permits and housing starts all missed expectations. However, the Philly Fed manufacturing did post a positive number later in the day. It is also worth noting that Fed Vice Chair Stanley Fisher stated that the US economy is rebounding in Q2. Comments from FOMC officials continue to be mixed. With regards to June, the ongoing questions will continue and much of the focus will be dependent on next month’s employment data.
In Europe the ongoing debate surrounding Greece continues as key officials procrastinate about a solution and terms that would satisfy creditors. Optimism continues to wane that an agreement with the country’s creditors can be reached before the next Euro-group meeting. Bloomberg reported that Greek officials had said that the country’s capital is disintegrating and could miss repayments due to the IMF in the first two weeks of May. The saga continues...
IPSOS Mori released their latest UK election survey. The nationwide poll showed that the gap between Labour and the Conservatives remains tight. Last night’s opposition debate resulted in Labour winning according to the post snap survey.
Whilst the media continues to focus on the outcome of the election we feel that the risk to Sterling will remain once the dust has settled. Big questions still need to be answered after the General Election. We feel that the question marks over leadership, Europe and how to tackle the current account deficit will weigh on the Pound. In addition, there will be question marks on growth as we expect the first two years of the government will be committed to tackling the deficit (currently the worst in the G10) which in turn could delay an interest rates hike.
Looking to the day ahead we have some key economic releases. From the UK the employment sector will be scrutinised with the release of average earnings, claims and unemployment rate. Crossing the pond the US has the latest reading on inflation and consumer sentiment. Finally in the background we have the IMF meeting.