It was a choppy week for the Pound as investors digested a raft of polls ahead of this week’s general election. Most pollsters agree that Theresa May has seen her lead reduced although by how much is subject to some debate. Data wise, UK manufacturing PMI slowed in May while construction PMI jumped to its highest since December.
For the week, the pound gained 0.6% against the US Dollar but lost 0.5% against the Euro and 0.4% against the Yen.
This week, focus will undoubtedly be on Thursday’s general election although the results will not be available until early Friday morning. Data wise, service PMI is out today followed by industrial production and trade figures on Friday.
The Euro moved higher last week, albeit modestly, as investors speculated about the outcome of this week’s ECB meeting. Market participants are mindful of a hawkish surprise after an ECB sources story suggested last week that policymakers will upgrade the risk assessment and will also discuss removing the easing from the statement.
Providing a weight to the Euro however was a resurfacing of Greek debt concerns after German media reported that Greece could opt out of their next repayment – this was later denied by a Greek government spokesman.
Focus this week will be on the aforementioned ECB policy meeting on Thursday.
The US Dollar fell against most of the major currencies last week, including a sharp decline on Friday after US non-farm payrolls fell short of market estimates. Data released earlier in the week had also weighed on the Dollar with consumer confidence and pending home sales falling short of expectations.
Markets are still pricing in a high probability (91%) of a June rate increase but some economists have pushed out their forecast for the third hike this year to December from September.
This week, focus shifts back to politics as former FBI Director Comey testifies to the Senate Intelligence Committee on Thursday. Data wise, ISM non-manufacturing, service PMI and factory orders are out later today while JOLTS, jobless claims and wholesale inventories follow later in the week.
The Japanese Yen saw a modest move higher against the major pairs last week. Safe-haven flows were evident on Monday after the latest North Korean missile testing. Data released later in the week will also have provided some support as retail sales and manufacturing PMI both surprised to the upside.
Looking ahead, service PMI figures are due today followed by wage data tomorrow and GDP figures on Wednesday.
The Swiss Franc gained last week despite a soft Q1 GDP report on Thursday. Safe haven flows were evident early in the week after the latest North Korean missile testing. Heightened concerns regarding the outcome of the UK election and Comey testimony next Thursday will also likely have provided support.
This week, we await unemployment and CPI figures on Thursday.
The Aussie Dollar fell last week, weighed by declining oil prices and weaker Chinese macro data. US crude futures fell four percent for the week to a three-week low of $46.74 on Friday.
Earlier in the week, Chinese Caixin manufacturing PMI dipped back below 50 to an eleven-month low.
This week, the RBA policy decision tomorrow will be the main focus. Data wise, we await GDP on Wednesday and trade figures on Thursday.
The Canadian Dollar fell last week, weighed by declining oil prices and a weaker than expected annualized GDP print on Wednesday also provided a weight.
This week, IVEY PMI, building permits and housing starts all precede the key employment report on Friday.
NEW ZEALAND DOLLAR
The New Zealand Dollar gained last week, bucking the trend of falling commodity currencies last week. ANZ confidence indicators improved on Wednesday while the RBNZ Financial Stability Report also noted some encouraging signs on the economy.
The Swedish Krona gained last week despite a fairly weak GDP report on Tuesday. This was likely balanced by stronger retail sales for April although manufacturing PMI also missed forecasts.
Ahead, we await service PMI later today and industrial production on Wednesday.