US manufacturing disappoints
Tuesday 16 May, 2023
Daily Currency UpdateOn Monday a gauge of New York state manufacturing activity slumped. The May data showed it dropped the most in more than three years with the index dropping 42.6 points to minus 31.8. A minus figure shows a contraction within the sector. The news did little to shake the USD, only losing a little ground against both the GBP and EUR.
Overnight Chinese data has suggested that the country’s post-COVID economic rebound is slowing. Both industrial productions and retail sales grew less than expected through April and, as China is a major exporter globally, this has hit risk appetite among market participants. Safe havens such as CHF, JPY, and USD are normally bought at these times, and this has been seen with USD strength this morning. UK employment data earlier this morning showed the unemployment rate rose to 3.9% in March and people claiming unemployment benefits has risen by 15.5k. The combined news took GBP/USD back below 1.2500 to 1.2475 and EUR/USD saw a small drop also. Both currency pairs have recovered since and opened at GBP/USD 1.2520 and EUR/USD 1.0890.
Key MoversIt seems we could be in for a volatile week for the GBP, EUR, and USD with several key releases expected before the weekend. Today, we anticipate Flash GDP q/q from the Eurozone which is expected to show the region barely grew in the opening three months of the year, German ZEW economic sentiment which is expecting its 5th straight fall back into negative territory, and retail sales from the US is expected to see a month-on-month uptick. Tomorrow, Bank of England governor Bailey is Due to speak at the British Chambers of Commerce Global Annual Conference in London. Thursday, we await the latest unemployment data from the US. These data releases now come very much in focus for currency movement as central banks continue to navigate their way out of inflationary concern and this means market participants will be scrutinizing local data for any indicators on the next steps central banks will take to tackle the issue.
- GBP/USD: 1.2450 - 1.2560 ▼
- GBP/EUR: 1.1450 - 1.1530 ▲
- GBP/AUD: 1.8650 - 1.8780 ▲
- EUR/USD: 1.0850 - 1.0910 ▼