April 18, 2023

Daily Report 18/04/2023

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Bank of England deputy Governor Cunliffe concentrated his comments on the cryptocurrency regulatory framework and there was no rhetoric on monetary policy with markets expecting at least one more rate hike. Overall risk appetite held relatively steady during the day with limited net gains for UK equities. The UK labour-market data recorded a slight increase in unemployment, but there was a stronger than expected employment increase. Importantly, headline annual wages growth held at 5.9% compared with expectations of a decline to 5.1%. The latest inflation data will be released on Wednesday with consensus forecasts for a decline in the headline rate to 9.8% from 10.4% previously. The core rate is forecast to decline to 6.0% from 6.2%.

Key Data

7.00 Claimant Count Change (Mar) Act. 28.2K Exp. -11.8K Prev. -18.8K
7.00 ILO Unemployment Rate (3M) (Feb) Act. 3.8% Exp. 3.7% Prev. 3.7%

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ECB council member Kazaks stated that the May policy decision was between a 25 and 50 basis-point rate hike and the Euro held against the dollar. The Euro dipped to lows towards the European close as the dollar held gains. ECB President Lagarde stated that changing the 2% inflation goal can be discussed once the current objective is achieved which created some uncertainty. Stronger than expected Chinese data provided limited Euro.

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The US New York Empire manufacturing index recovered very strongly to 10.8 for April from –24.6 the previous month. The release was well above consensus forecasts of –18.0 and the first positive reading for 5 months. There was a surge in new orders for the month with production also posting strong growth, although unfilled orders were unchanged. Employment continued to decline on the month and the workweek also declined. There was a net easing of cost pressure, but prices received increased at a slightly faster rate. Companies were only slightly more optimistic over the outlook while inflation pressures are expected to increase slightly.

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