UK mortgage approvals declined to 66,000 for April from a revised 69,500 the previous month and below consensus forecasts, but here was a slightly stronger than expected increase in consumer credit. Overall net lending increased £5.5bn after an £8.8bn increase the previous month. The data had little impact and Sterling was unable to make significant headway during the day with an underlying lack of confidence in the outlook. Net risk conditions were important with the currency losing ground as US futures moved lower before regaining territory as Wall Street attempted to rally. There is liable to be further position adjustment on Wednesday ahead of UK market holidays on Thursday and Friday.
No Key Data
German unemployment declined 4,000 for May after a 13,000 fall the previous month with markets still uneasy over underlying conditions within the Euro-zone. Developments in the energy sector will continue to be watched closely following the deal to severely curtail oil imports from Russia. In particular, there will be a focus on the Russian response and any further restriction of gas supplies to EU countries which would undermine confidence. The headline Euro-zone CPI inflation rate increased to 8.1% for May from 7.5% for April which was above consensus forecasts of 7.8% and the highest reading on record. The underlying rate also increased to 3.8% from 3.5% and above expectations of 3.6%, maintaining pressure for ECB policy tightening. ECB council member de Cos stated that the central bank can gradually remove stimulus. He added that second-round effects are not yet materialising. He did, however, add that it is essential that inflation expectations can be anchored at the 2% target and that if inflation persists it is more likely to feed through into wage negotiations and trigger second-round effects. The Euro was unable to gain support from the inflation data with markets fretting over the growth outlook while a July rate hike has been priced in.
Key Data
7.00 German Retail Sales (YoY) (Apr) Act. -0.4% Exp. 4% Prev. -1.7%
12.00 Christine Lagarde Speech
The latest US ISM manufacturing data will be examined closely on Wednesday, especially with notably mixed regional surveys for the month. US consumer confidence declined to 106.4 for May from a revised 108.6 previously, although this was above market expectations. There was a decline in the current conditions and expectations components for the month with slightly less confidence in the labour market. The May Chicago PMI manufacturing index strengthened to 60.3 from 56.4 previously and above consensus forecasts of 55.0. The Dallas Fed manufacturing index, however, declined to -7.3 from 1.1 previously.
Key Data
15.00 ISM Manufacturing PMI (May) Exp. 54.5 Prev. 55.4