Daily Market Color
05.30.2014
Economic
Reports & Headlines
April CPI (year over year): 3.4% versus March's reading of 1.6%
April Household Spending (year over year): -4.6% versus consensus of -3.1%
April Unemployment Report: 3.6%, unchanged from the last reading
April Industrial Production (month over month): -2.5% versus consensus of -2.0
Later on in the global trading session, Germany released retail sale figures for April was unexpectedly weak. On a month over month basis, sales dropped 90 basis points versus expectations of a 40 basis point increase.
Consumer prices in Italy for April declined by 10 basis points on a month over month basis. The decline was expected.
First quarter GDP in India came in slightly below consensus. The economy grew 4.6% versus consensus of 4.7%.
Personal income and outlays in the US for April was mixed but weak overall. Personal income grew 30 basis points instead of the expected 40 basis points. Consumer spending declined 10 basis points instead of increasing 20 basis points. Core PCE and PCE increased 20 basis points, which was in line with consensus.
Canada's first quarter GDP missed consensus by coming in at an annualized 1.2%, economists were expecting a rise of 1.8%.
On the domestic front, Chicago PMI for May was stronger than ever and blew past consensus. Business in the Chicago area expanded 65.5 versus consensus of 61.0. Any reading above 50 is an expansion while reading below 50 is a contraction.
The University of Michigan Consumer Sentiment Index for May was below consensus, but still good overall. The report came in at 81.9 versus estimates of 82.5.
During an interview in CNBC, Philadelphia Fed President, Charles Plosser, forecast a 3.0% annual growth rate towards the end of 2014.
They were plenty of reports to interpret and digest during Friday's trading session. Japan's strong CPI numbers could be largely attributed to the new 8% sales tax that was recently implemented. Retail sales in Germany and Consumer Prices in Italy were poor and supported the need for the ECB to combat deflation in the country. In the US, the reports were all insignificant. The Chicago Purchasing Managers' report was very strong, but it only represents one region in the US.
At this point I will adjust my focus to the EUR/USD. The easing from the ECB is drawing near and I expect the world's most popular and widely trading currency pair to be volatile once the ECB makes their monetary policy announcement. After the ECB trade, I expect the Bank of England to make the next move if economic reports from the UK keeps showing inflation rising.
