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Global Exchange

Exchange Rates for Sunday 5th July 2015

UK Services PMI improved yesterday as the markets expect no change from Bank of England today

Yesterday proved to be more of the same in terms of data and surveys. The services PMI's from the UK and the Eurozone reported signs of improvement, with the UK survey recovering back above 55 after last month's fall, whilst the Eurozone survey crawled back above the 50 level, indicating the most modest of expansions.

The German factory orders data from February was dismal; in spite of upward revisions to the January data, February orders rose by just 0.3% which equates to a 6% fall on the year.

The European Central Bank (ECB) left monetary policy unchanged, and ECB President Mario Draghi gave the Bundesbank something of a chiding over their absurd contention that central bankers should start preparing an exit strategy for the €1 trillion of 'cheap' liquidity pumped into the financial system only a few months ago. There is still the potential for further monetary loosening going forward, with economic conditions still weak in the Eurozone and potentially deteriorating.

All the data meant that Sterling had a pretty constructive day, gaining on the Euro and holding firm against the US Dollar, the Australian Dollar and New Zealand Dollar but falling against the Japanese Yen.

Today's data releases centre around industrial production in the UK and Germany for February and the labour market in the US. The Bank of England also meet today, but there is virtually nobody that expects a change in monetary policy today.

The industrial production figures are expected to report a 0.4% month on month increase in the UK, whilst the German figures are expected to report a 0.5% month on month fall.

As for the US labour market data, the Challenger job reports should record further improvement in labour market conditions, as should the latest week jobless claims numbers.

With four days off ahead, London investors will not want to get too busy today, lest it spoils their plans for an early departure this afternoon. Speaking of which, have a good weekend and a happy Easter. 

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