Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Banks

RBS falls 2% after failing BoE stress test

Royal Bank of Scotland shares have slipped 2 per cent in early trading this morning, after the state-controlled lender emerged as the biggest loser in the Bank of England’s latest round of annual stress tests. The lender has now given regulators a plan to bulk up its capital levels by cutting costs and selling assets, […]

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Currencies

Euro suffers worst month against the pound since financial crisis

Political risks are still all the rage in the currency markets. The euro has suffered its worst slump against the pound since 2009 in November, as investors hone in on a series of looming battles between eurosceptic populists and establishment parties at the ballot box. The single currency has shed 4.5 per cent against sterling […]

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Banks

Carney: UK is ‘investment banker for Europe’

The governor of the Bank of England has repeated his calls for a “smooth and orderly” UK exit from the EU, saying that a transition out of the bloc will happen, it was just a case of “when and how”. Responding to the BoE’s latest bank stress tests, where lenders overall emerged with more resilient […]

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Currencies

China capital curbs reflect buyer’s remorse over market reforms

Last year the reformist head of China’s central bank convinced his Communist party bosses to give market forces a bigger say in setting the renminbi’s daily “reference rate” against the US dollar. In return, Zhou Xiaochuan assured his more conservative party colleagues that the redback would finally secure coveted recognition as an official reserve currency […]

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UK and US manufacturing activity in focus


Posted on May 31, 2015

The coming data-heavy week presents a broad mix of indicators for leading economies. Monthly activity surveys for the US, UK and China are out on Monday and Wednesday, eurozone inflation and growth data are published on Wednesday and Friday respectively, then there are interest rate announcements from the European Central Bank and Bank of England on Wednesday and Thursday with US non-farm payrolls available on Friday.

Little action is expected from the ECB or BoE meetings this week, UK inflation turned negative in April making the chance of a near term rate rise even less likely.

    Ranko Berich, head of market analysis at Monex Europe sums up the situation at the ECB: “The eurozone economy is undoubtedly beginning to turn a corner, but the ECB has been utterly adamant that no amount of good short-term data will shake its commitment to completing its QE programme. Extremely accommodative monetary policy is here to stay for the foreseeable future.”

    Monthly manufacturing activity for May, measured by the purchasing managers’ index is out for the UK on Monday. Election uncertainty slowed activity in April but the sector continued to expand, while improvement is expected for May with the index moving to 52.8.

    The US equivalent, from the Institute for Supply Management, has been hit hard since the end of last year. Falling investment in the energy sector and sluggish export growth have weighed on certain manufacturing sectors, pushing the index from 57.9 in October down to 51.5 in April. The May figure is expected to rebound marginally to 52.

    UK service sector activity has seen constant expansion since the beginning to 2013; the April reading of 59.5 remained strong and well above the 50 level that indicates growth. This trend is expected to continue in May albeit at a slightly reduced rate of 59.1. US services measured by the ISM non-manufacturing PMI has followed a similar path of strong growth, averaging 57.2 in the past six months and a reading of 57.8 in April. May’s figure is expected to remain on trend with a reading of 57.0.

    Eurozone prices edged out of deflation territory in April as downward pressure on food and energy prices subsided, leaving prices flat over the year. Oil prices have rebounded by about a third from the lows seen at the start of the year and as a result overall prices are expected to rise again in May, with analysts expecting 0.2 per cent annual growth when figures are released on Tuesday.

    The second estimate of eurozone GDP is released on Friday. While analysts do not expect the 0.4 per cent quarter-on-quarter growth figure for the first quarter to be revised, the additional detail that becomes available is expected to reveal a strong boost to consumer spending as a result of lower energy costs.

    US non-farm payrolls out on Friday are expected to remain firm, with a 223,000 gain in May, in line with April’s figure. The unemployment rate is expected to remain at 5.4 per cent.