No Fed interest rate cut this year?
Hello from London! 🇬🇧
This week we continue our tour of the EEA, and we're traveling to the Hungarian Parliament of Budapest in 🇭🇺 Hungary.
Here's a quick recap of the past week movement on the main pairs, weekly economic news and what to expect for the week.
🇬🇧 GBP
Last week saw the release of PMIs figures for the United Kingdom, with once again manufacturing PMIs underperforming expectations with a contraction at 48.7 and services PMIs carrying the British economy with an expansion at 54.9.
CBI Industrial Trends Orders for April show a -23 figure, showing a volume of order rapidly decreasing and at a much faster pace than the -16 figure expected, in line with the worse than expected manufacturing PMIs. If you would like to understand why, click here to read last week's blog with a more in-depth analysis of the British manufacturing sector.
Public net sector borrowing has also increased in March to £11.02Bn, up from £8.60Bn in February.
Today also saw the resignation of Hamza Yousaf, the First Minister of Scotland after facing a vote of no-confidence from his parliament. The First Minister had terminated the Bute House Agreement which formed a coalition between his party and the Scottish Greens, after ditching the target to have Scotland's emissions to be reduced by 75% by 2030.
His government had also decided against the prescription puberty blocking hormones for minors after a review outlined the lack of clinical research on their long-term effects, alienating part of his own SNP members on the way. His brother-in-law has also been charged on multiple drug trafficking charges, abduction and extorsion offences.
Before him, Nicola Sturgeon and her husband had been arrested in connection with embezzlement as part of a police investigation into the SNP’s finances, whilst she was not charged, her husband was for embezzlement.
🇪🇺 EUR
Last week, Europe had also a disappointing week for its manufacturing PMIs with contraction in France (44.9), Germany (42.2) and the wider Eurozone. Services PMIs on the other hand remained in expansion with services coming in all the major EU economies, lifting the Eurozone economy up.
German business expectations were positive last week with the Ifo Business Climate coming out better than expected at 89.4 and the GfK Consumer Climate falling at a slower pace than expected at -24.2, signalling a potential improvement of the situation in Germany as inflation fell to 2.2% in March.
Spanish CPI also came out at 3.3% today with French and Eurozone CPI expected this week, showing an overall success in slowing down inflation by the ECB. This could lead the European Central Bank to be the first central bank to cut rates this year.
This week will be a short one in Europe with Labour Day happening this Wednesday throughout the European Union.
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🇺🇸 USD
Manufacturing PMIs in the United States also dropped in a small contraction last week at 49.9, with services PMIs remaining in expansion at 50.9 in March.
New home sales increased by 693k and durable good orders increased by 2.6%.
This week the Federal Reserve is due to decide on interest rates, with the general consensus being that the Fed will decide to maintain rates and may not cut rates at all this year as inflation topped 3.5% last month as the Central Bank struggles to keep a hold of the increase in prices.
The end of the week will also see the release of US trade balance figures and non-farm payroll figures, with both outperforming expectations so far this year, which could have a significant on the movement of the dollar for the upcoming weeks.
🇺🇳 Other
After reaching its lowest level since 1994 against the US dollar, the Japanese yen topped near the 158.0 level last week. The Bank of Japan decided last week against a hike increase and maintained rates at 0.10% after years of negative interest rates. Nevertheless, after opening this week, USD/JPY dropped around 156.50 with markets now pricing a BoJ intervention sooner than later.
This week we will be expecting Chinese PMIs, with both services and manufacturing expected in expansion. Labour day this week will see China on holiday from Wednesday until the end of the week.
Open rates week 29/04/2024:
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8moThanks for the insightful update on the movement in the main pairs and the economic news from the past week. 🙌🏻 It's interesting to see the mixed PMIs across different regions. 💯 Thanks for sharing this, Julien Gérard Jean Dufour 🌟