US Inflation, ECB interest rate decision, PMIs: What to keep an eye on
Hallo aus München! 🇩🇪
This week's takes us to the castle of Neuschwanstein and the black forest in Bavaria, 🇩🇪 Germany. The castle was built in the 19th century by King Maximilian II of Bavaria and served as inspiration behind Disneyland's sleeping beauty castle.
Eid Mubarak as well to all the Muslims around the world as today marks the end of the ramadan for over 1.9 billion Muslims.
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
Good news last week in the UK with manufacturing, services and construction PMIs all back in expansion after months of relying heavily on the services sector to drive the UK economy. Retail sales are also on the rise with an increase by 3.2% in March.
The average mortgage rate remains unchanged at 7.92% in March with so far data unsupportive of a Bank of England rate cut in the near future, although the central targets cuts for this year with inflation down to 3.4% in March, but still far from the 2%.
This week we'll keep an eye on RICS House Price Balance, industrial productions figures, and the UK's trade balance.
🇪🇺 EUR
The Eurozone manufacturing sector is struggling with a manufacturing PMI still in contraction at 46.1. Germany and France are the main reason as they both see their manufacturing PMI in contraction, whilst Italy and Spain have seen theirs jump to expansion.
German industrial production saw an increase by +2.1%, much better than expected which comes as good news as PMI the data remains weak, and Germany suffered immensely from low demand from China and the energy cost rise following the war in Ukraine as its economy can no longer rely on cheap Russian gas.
The services PMIs is however in expansion at 51.5, this time aided by expansions in Germany, Italy and Spain, whilst France sees contraction on its services PMIs too.
This week the big news will come from the European Central Bank interest rate decision on Thursday, with inflation falling almost back to target levels in many countries in Europe, which could indicate that the ECB is ready for rate cuts, with markets favouring the ECB to be the first major central bank to do so.
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🇺🇸 USD
In the United States, PMIs are also all in expansion, but last week also saw the release of nonfarm payroll figures with a better than expected results. The NFP came out at +303k against an expected figure 212k, showing again a booming activity in the US.
However, the big news this week will be the US inflation figure as it the Federal Reserves has struggled to get it below the 3% mark in last few months, despite planning rate cuts this year.
FOMC meeting minutes from their last meeting will also be a good insight into the US Central Bank policy for the months to come.
🇨🇳 CNY
Chinese Inflation figures are due this Thursday as China fights the opposite problem of the western world which is low inflation and deflation at times. The Chinese economy was one of the first country to see inflation come down following the rise of costs worldwide, but this has led as well to low demand for Chinese goods and services, along with trade wars with the US and Europe. Indeed, Mexico last year became the largest trade partner of the United States, surpassing China after years of Chinese dominance.
Trade balance figures due at the end of the week will also be a good indication of the situation for China as it tries to move away from its reliance to European and American demand and moves towards trade agreements with developing countries and other member of the BRICS.
Open rates week 08/04/2024:
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