Sterling unable to capitalise and bullish data

Yesterday’s markets

18th May 2017

  • GBP - Average Earning Index 3m/y: 2.4%
  • CAD - Manufacturing Sales m/m: 1.0%
  • AUD - Employment Change: 37.4K

The UK released a raft of bullish labour data yesterday morning. However, it was not enough to push GBP/USD and GBP/EUR above the key psychological levels economists’ are targeting. The headline unemployment rate yesterday exceeded market expectations posting a 42 year low of 4.6%, whilst average earnings, the claimant count and jobless claims also beat the market consensus. However, with inflation continuing rise at a rapid pace and average earnings lagging behind, Carney’s comments earlier this week that the consumer is in for a challenging time, look more and more likely.

The Greenback depreciated throughout the day yesterday, after former FBI director, James Comey, released a memo back in February. The memo revealed that Donald Trump had asked Comey to drop the inquiry into the links between Russia and Trump’s ex-national security adviser, Michael Flynn. As a result of this news, there is speculation that obstruction of justice charges might be brought against Trump. The White House has denied the claims of the memo. In recent developments, the Justice Department has named former FBI Director Robert Mueller as special counsel to oversee the FBI’s investigation of Russia’s efforts to influence the 2016 election. Mueller is seen as a strong hand, therefore sparking further concerns that the ‘Trump Dump’ will continue and the Greenback decline.

Today’s markets

17th May 2017

  • GBP - Retail Sales m/m
  • USD - Unemployment Claims
  • EUR - ECB President Draghi Speaks

Another busy economic docket today so we expect high levels of volatility throughout the European session.

Firstly, the UK release their highly anticipated retail sales figure, forecast to bounce back from last month’s big decline of -1.8% to 1.2%. Shortly after, the US release a key piece of labour data, in the form of unemployment claims at 13:30 BST. Finally, we finish the day with comments from ECB President Mario Draghi, as he addresses the market at 18:00 BST today at the University of Tel Aviv.