UK Retail Sales Expected to Drop after April Pop
UK retail sales expected to plunge, bailout deadlock puts euro in a spin, Eurozone CPI and India rate decision awaited
After yesterdays mixed employment data and surprising rise in April Nationwide consumer confidence, sterling bulls will be hoping for more good cheer today with the release of May retail sales figures after the surprise 1% rise that we saw in April, which were no doubt boosted by the late Easter, the un-seasonally warm weather and the Royal Wedding. Analyst expectations are for May sales to slide 0.6% on the perception that a lot of summer buying may have been brought forward.
In any event given that expectations are so low even an upside surprise might not see too much of a reaction given the trade weighted gains weve seen since the beginning of this week. Key level on cable remains around the 1.6000 area, the 200 day MA
The political deadlock in Europe surrounding a possible solution to the Greece problem has continued to roil markets, sending the single currency to its sharpest fall in six weeks, as the Greek Prime Minister lost parliamentary support for further austerity measures against a back drop of rioting and protest in the Greek capital. Papandreou also pledged to try and form a new government which could complicate matters with respect to a speedy resolution to the crisis. Reports that ECBs Wellink stated that European aid may well have to be doubled to 1,500bn has also undermined the single currency.
As the crisis in Greece rumbles on there is the small matter of Eurozone CPI for May which is expected to slip back to 2.7% from Aprils 2.8%, while core CPI is expected to remain unchanged at 1.6%. There is little likelihood that it will make much difference to the likely decision by the ECB to raise interest rates again at the next meeting in July.
All the while the Swiss franc continues to gain on safe haven flows making new all-time highs against the single currency.
In Asia markets stocks fell back as the crisis in Europe rumbled on and eyes will be on the Reserve Bank of India which is expected to raise interest rates after this weeks inflation figures showed prices increased by over 9%. This could well be a precursor to further tightening measures across emerging markets and Asia and in particular China, who could well follow the reserve requirements hike this week with another 0.25% hike in deposit rates this week.
In the US weekly jobless claims, housing starts and Philadelphia Fed survey are due out, and given yesterdays disappointing NY Empire data there is concern that Philly Fed could similarly disappoint.
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