Today could be a pivotal day for sentiment, with key pieces of data coming from different regions across the globe. UK jobs data, German ZEW sentiment data and US industrial production and manufacturing data could provide investors with a clearer picture of the health of the global economy and provide hints over any signs of recovery.
UK wage data to boost pound?
The pound was dipping lower in early trade ahead of UK labour report later this morning. Whilst UK unemployment is expected to tick higher to 4%, investors will be focusing on the wage’s component of the report.
Average wages are expected to have increased to 3.5% year on year in the three months t o February. With inflation in February down at 1.9%, indications point to pressure easing on the UK consumer. This should in theory be good news for the economy as more disposable income leads to increased spending and stronger inflationary levels. With the Brexit can kicked further down the road, the BOE cannot use it as a reason to sit on the fence anymore. Not for six months anyway. This could temp the BoE to consider hiking rates sooner rather than later. The pound could push back over $1.31 in the case of impressive wage data.
German ZEW sentiment data in focus
In the eurozone attention will be squarely on German ZEW sentiment data; the first of a string of notable eurozone economic indicators due for release this week. Investors will be scrutinising the numbers for hints of a pick up in economic momentum at the start of the second quarter. The euro is sitting around support at $1.13 ahead of the print.
Oil declines for a third straight session
Oil was drifting lower for a third straight session, putting it in line for its longest losing streak since late December. Whilst continued OPEC production cuts have been offering support to the price of oil across the year to date, fears are growing that the days of reduced OPEC output could be limited. Russia has indicated that Russia and OPEC could consider upping production to fight the US for market share. This comes after recent data shows production in the US ramping up sharply. The overriding fear here is that the cuts, which have supported the price of oil, will soon be removed altogether. OPEC and Russia will meet in June to decide whether to continue withholding supply.
Whilst concern over a change in policy from OPEC is weighing on the price of oil, losses should be kept in check by tighter supplies from Iran and Venezuela. Expectations are growing that US sanctions could on these oil producing countries could be tightened. When combined with the threat of outages in Libya amid escalating conflict, we expect $60 to remain as a solid floor to the price of oil.
Opening calls
FTSE to open 17 points higher at 7453
DAX to open 32 points higher at 12052
CAC to open 10 point higher at 5518
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