TALKING POINTS – CRUDE OIL PRICES, UK UNEMPLOYMENT DATA, BREXI RISKS, EUROPEAN ECONOMY
- GBP groans ahead of local unemployment data after dismal reports
- NOK eying local CPI as crude oil prices continue to show weakness
- Euro traders will be a keeping a peripheral eye on confidence data
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Sterling traders will be nervously waiting for the release of local unemployment data after a recent publication of abysmal economic data. The highlight was month-on-month UK manufacturing data, which shrunk 3.9 percent in April – the largest contraction in approximately 17 years. An unfavorable political backdrop is compounding weakness in GBP with the race for the position of Prime Minister introducing greater uncertainty in the Brexit narrative.
In addition to monitoring the EU-UK divorce, the Euro will also be watching tomorrow’s release of the Eurozone Sentix investor confidence report. The median estimate has the survey pegged at 2.5, considerably lower than the previous reading at 5.3. The last report was actually the lowest reading since November and the index has been steadily declining January 2018.
Increasing political uncertainty over Brexit, the budget dispute with Italy, and growing tension between the EU and US over policy toward Iran have not helped bolster confidence in the Euro. Furthermore, PMI data out of key Eurozone economies – Germany, France and Italy – have been showing alarming weakness. Compounding fears are ongoing debates about who will replace the head of key EU institutions e.g. the ECB.
In the Nordics, Norway will be publishing a cascade of inflation data with expectations that price growth will show weakness amid falling crude oil prices and souring global sentiment. The Norwegian economy’s foundation is built on the petroleum sector, making it exposed to oscillations in global demand. With Europe as its biggest client, it is likely that if regional growth trends continue, inflationary pressure in Norway will continue to wane and could disrupt the Norges Bank’s intended rate hike cycle.
CHART OF THE DAY: OBX INDEX, NOK-CROSSES SHOW WEAKNESS ALONGSIDE FALLING CRUDE OIL PRICES
EURO, GBP, NOK TRADING RESOURCES
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— Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com
To contact Dimitri, use the comments section below or @ZabelinDimitrion Twitter