Quiet enough start to the week
The euro firmed to just north of $1.08 against the dollar for a time yesterday before easing back again, and is trading at around $1.0780 this morning. Sterling also briefly gained some ground against the US currency but has since fallen back a bit to around $1.0560. All of this, meanwhile, leaves the euro-sterling cross little changed in and around 86p. UK labour market data released earlier this morning were a touch firmer than the consensus expected but have had little enough impact on the pound.
It was relatively quiet in bond markets yesterday. US and German yields nudged down, partially reversing some of Friday’s modest increase, while UK yields crept up a little. It was similarly uneventful in equity markets, with both European and US stocks ending slightly lower on the day.
Employment in the UK fell in the first quarter of this year and job vacancies declined further, according to this morning’s data, while the unemployment rate rose to 4.3% from 3.8% in the final quarter of last year. Whole-economy wage growth, as measured by average weekly earnings (excluding bonuses), dipped to 6% year-on-year in Q1 from 6.2% in the previous quarter, while private sector wage growth – which the Bank of England is particularly focused on – eased to 5.9% from 6.2% over the same period. All told, the latest data are consistent with the BoE’s view that a gradual loosening of the labour market is underway.
US consumers inflation expectations rose in April according to the New York Fed’s latest survey, with expected inflation one-year and 5-year ahead rising to 3.3% and 2.8% respectively from 3.0% and 2.6% in March. A similar increase in inflation expectations was reported in the University of Michigan’s consumer confidence report published at the end of last week, with inflation concerns contributing to a decline in consumer sentiment to a six-month low in May.
Economic data due today include producer price inflation in the US, which markets will be watching closely, and the ZEW investor sentiment index for Germany and the Euro area. Fed Chair Powell will also be on the wires later today.