There was little sustained reaction to the UK jobs data with evidence of a tight labour market offset by evidence that the labour market was cooling. Sterling was hampered to some extent by underlying reservations over the Brexit impact with ONS data indicating that the number of UK companies exporting to the EU declining by over 30% in 2021. Sterling did find support against the dollar and rallied marginally as the decline in US bond yields temporarily loosened the dollar’s grip on major currencies. The news that Prime Minister Johnson had been fined for a lockdown breach did not have a significant impact, but markets will be monitoring developments closely. The headline UK inflation rate surged to a 30-year high of 7.0% for March from 6.2% previously and above consensus forecasts of 6.7% while the core rate increased to 5.7% from 5.2%.
Key Data
7.00 Consumer Price Index (YoY) (Mar) Act. 7% Exp. 6.7% Prev. 6.2%
The German ZEW economic confidence index edged lower to -41.0 for April from -39.3 previously, but above consensus forecasts of -48.0. The current conditions index dipped to -30.8 from -21.4, but also above market expectations and there were further reservations over the Euro-zone outlook. There was no Euro support from Ukraine developments with very strong expectations that there would be a major Russian offensive on the Donbas. Russian President Putin stated that peace talks with Ukraine were at a dead-end. Germany stated that gas supplies would last until late summer if Russian supplies were cut off.
No Key Data
US consumer prices increased 1.2% for March which was in line with consensus forecasts. The year-on-year inflation rate increased sharply to 8.5% from 7.9% which was slightly above market expectations of 8.4% and the highest rate since the end of 1981. Energy prices surged 11.0% on the month with an annual increase of 32.0% while fuel oil increased 70% on the year. Food prices increased 1.0% on the month with an 8.8% annual increase. Underlying prices increased 0.3% and below forecasts of 0.5% with the annual rate marginally below expectations at 6.4%. This was still an increase from 6.4% and the highest rate since August 1982. There was a 3.8% decline in the prices for used trucks on the month while apparel prices increased 0.6%.
No Key Data