Market Drivers May 15, 2018
UK Labor data in line
EZ data in line
Nikkei 0.47% Dax -0.16%
Europe and Asia:
UK Labor Claimant Count 31K vs. 23K eyed
UK Average Weekly Earnings 2.9% vs. 2.9%
EZ GDP 0.4% vs. 0.4%
EZ IP 0.5% vs.0.7%
USD Retail Sales 8:30
The dollar was just a wee bit stronger in early European trade as both EZ and UK data printed on consensus providing little economic catalyst for today’s trade.
In EZ the second revision of GDP came in at 0.4% as forecast while EU Industrial Production was a little soft at 0.5% versus 0.7% eyed. Overall the data confirmed the steady but slowing growth picture in the region offering little fresh reason to get long euros. Yesterday remarks by ECB’s Coeure offset the earlier hawkish rhetoric by Banc de France Governor Francois Villeroy and sent EUR/USD tumbling in late US dealing. The pair failed to take out the key 1.2000 figure and then crashed as profit-taking came in. For now it sits ahead of the 1.1900 figure but will likely break to the downside if US data surprises to the upside.
In UK the Labor data came in line with average hourly earnings printing at 2.9% as projected. The news provided a mild boost to cable bulls thesis that the BOE will consider a hike before the summer end, but markets awaited the Inflation report tomorrow to get a better understanding of central bank’s thinking. Today’s data showed that there is no further deterioration in UK data so far and that the recent weakness may have been exacerbated by inclement weather just as BOE noted. Still, the jobs numbers were hardly torrid and data is certainly not showing any reacceleration of growth which is why the markets remained unmoved by today’s report.
The marquee event of the week, however, will be later today at 12:30 GMT. US Retail Sales are due with forecasts looking for core sales to rise to 0.5% from 0.2%. Anything within that range will likely prove positive for the dollar and will push USDJPY through the 110.00 figure. The pair just broke that barrier in late Asian trade but for a sustained break the market needs to see the US consumer begin to spend which would give Fed the license to hike rates four times this year and will push the 10-year permanently above the 3% level. For now the markets remain in wait and see mode hoping the US data will confirm the dollar rally.