Talking Points:
- Eurozone PMIs May Prove More Market-Moving for the Pound vs. the Euro
- NZ Dollar Slumps as RBNZ’s McDermott Talks Down Rate Hike Possibilities
- Franc Corrects Higher After Yesterday’s Aggressive SNB-Inspired Decline
The preliminary set of April’s Eurozone PMI figures headlines the economic calendar in European trading hours. The region-wide composite index is expected to show the pace of manufacturing- and service-sector activity growth continued to accelerate, hitting a new four-year high.
The report may not generate a lasting response from the Euro with ECB policy seemingly on auto-pilot for now. A supportive outcome may boost the British Pound however amid hopes that firming growth on the Continent will have positive spillover via a pickup in demand for UK exports. That in turn may drive speculation of a relatively sooner BOE interest rate hike. We remain short EURGBP.
The New Zealand Dollar underperformed in overnight trade, falling as much as 1 percent on average against its top counterparts. The move followed comments from RBNZ Assistant Governor John McDermott, who said the central isn’t considering an interest rate hike at present and would instead consider easing if demand and/or prices weakened.
The Swiss Franc proved strongest on the session as prices retraced some of yesterday’s outsized losses. That drop was sustained after the SNB reduced the number of institutions exempt from negative sight deposit rates, in effect expanding the scope of its easing effort.
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