Marknadsövervakning - 7th May 2021

The pound was supported initially, before the Bank of England meeting and interest rate decision. Interestingly, when the decision and statement were released, they showed a very positive scenario, but the pound couldn’t gain. UK GDP is now forecasted to grow by 7.5% in 2021 and 5.5% in 2022. The Bank also expected the economy to return to pre-Covid levels this year. The soon to be ex Bank economist Haldane also voted to actually reduce the stock of QE (a slight tightening of monetary policy), which is another supporting factor for the pound. However, GBP/USD gave up all of its pervious gains on the day, and GBP/EUR slipped lower by 0.5%.The market now waits for the results of the Scottish voting, which appear to show the SNP returning with a small majority but not enough for a supermajority. The pound may well like that outcome.

The euro gained 0.5% on the day against the USD, as Eurozone retail sales showed an excellent 2.7% gain from Aprils release and US yields slipped lower. Today, we have the release of German trade data and industrial production. We expected a surplus of euro 22.3 billion with the trade balance actually being euro 20.5 billion, while industrial production beat the expected 2.2% rise and was actually 2.5%.
US yields slipped lower, as it appears that the bond market believes the Fed and that inflation will be transitory. This implies that the Fed will not raise interest rates until 2024, as their dot plot has been suggesting. Today we have the release of non-farm payrolls and expect nearly 1 million jobs to have been added last month. Average earnings are expected to have risen by 0.1% and the unemployment rate fallen to 5.8% from 6%. 
The AUD has been surprisingly stable. Suggesting higher prices for the AUD, the copper price has hit all-time highs recently, and the commodity prices per se have risen across the board. On the other hand, the RBA has consistently kept interest rates low, and the relationship with China has deteriorated. Unless something changes, we could see more of this sideways trading. Chinese trade data showed April exports were up by 32% on an annual basis. Of course, this time last year the world was being locked down.

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