Rates Consolidate, UK Wage Growth Still High Despite Unemployment Rise
GBP
GBP/USD is currently trading at 1.2548 (interbank) whilst GBP/EUR is presently trading at 1.1631 (interbank).
This morning, the Office for National Statistics (ONS) reported that UK employers laid off 177K employees, surpassing the 156K workers in the previous December-February period. The ILO Unemployment Rate escalated to 4.3% as projected, up from the previous 4.2%.
Annual Average Earnings (including bonuses) continued to increase by 5.7% for the three months ending in March. Market participants had predicted a slowdown to 5.3%.
The labour market data clearly suggests that the economy is struggling to cope with the repercussions of elevated interest rates set by the Bank of England.
Under the current conditions, it appears opportune for the BoE to start reducing interest rates, as inflationary pressures also show consistent easing. Nevertheless, robust wage growth, which is driving service sector inflation, remains a significant concern for BoE policymakers.
Today’s Events (GMT):
07:00 - Average Earnings Index +Bonus (Mar) - Actual: 5.7% vs Forecast: 5.3%???
07:00 - Employment Change 3M/3M (Mar) - Actual: -177K vs Forecast: -215K
07:00 - Unemployment Rate (Mar) - Actual: 4.3% vs Forecast: 4.3%
08:30 - BoE MPC Member Pill Speaks
EUR
EUR/USD is presently trading at 1.0788 (interbank).
Recent data on German consumer prices indicate that inflation is under control in Europe's largest economy, with the annual rate for April confirmed at 2.2%. The Consumer Price Index (CPI) increased by 0.5% month over month, aligning with preliminary estimates.
The ECB maintained its peak rates during last month's session, as anticipated. ECB officials also hinted at a possible rate reduction in June, as inflation rates continue to fall and wage growth moderates.
Soon, the German and European ZEW Economic Sentiment indicators will be released, along with a speech by ECB member Isabel Schnabel.
Investors will also seek further insights from the preliminary Eurozone Gross Domestic Product (GDP) for Q1, due tomorrow, to gauge economic prospects.
Today’s Events (GMT):
07:00 - German CPI ?(Apr) - Actual: 2.3% vs Forecast: 2.2%
10:00 - German ZEW Economic Sentiment (May) - Forecast: 44.9
10:00 - ZEW Economic Sentiment (May) - Forecast: 46.1
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14:15 - ECB's Schnabel Speaks
USD
The Dollar Index, which gauges the U.S. dollar against a group of major currencies, last stood at 105.27, marking approximately a 1% decrease over the past month.
Yesterday, Fed Vice Chair Philip Jefferson recommended maintaining the current interest rates until signs of inflation relaxation are observed.
A recent survey by the Federal Reserve Bank of New York revealed that U.S. consumers anticipate a significant uptick in inflation over the next year, with expectations climbing to 3.3% from 3.0% in March for one-year consumer inflation expectations.
Attention is now on the Producer Price Index (PPI) due this afternoon, followed by the closely monitored consumer price index set for release tomorrow.
Additionally, investors are watching for signs that inflationary pressures are subsiding, amid prolonged high inflation that has fueled concerns about the Federal Reserve possibly refraining from rate cuts this year.
Today’s Events (GMT):
13:30 - Core PPI (Apr) - Forecast: 0.2%
13:30 - PPI (Apr) - Forecast: 0.3%
15:00 - Fed Chair Powell Speaks? ?????
CAD
USD/CAD is trading at 1.3681 (interbank) in today’s session.
Yesterday witnessed a steeper-than-anticipated drop in new Canadian Building Permits issued in March, though early housing cycle data is considered low-impact.
Recent strong Canadian labor market data for April may persuade the BoC to delay any policy changes to ensure sustained inflation control.
Oil prices have advanced today, as the market tightens due to operational interruptions, heightened demand, and voluntary production cuts. Brent crude rose 19 cents to $83.55 a barrel, while U.S. West Texas Intermediate (WTI) crude futures increased by 18 cents to $79.30 a barrel.
With sparse Canadian economic data this week, investor focus will likely shift to U.S. data for market fluctuations.
Today’s Events (GMT):
13:30 - Wholesale Sales (Mar) - Forecast: -0.9%
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