Technical & Fundamental Oil Reports Specialists

Follow us

Dollar under pressure

Published Thursday, May 14th, 2015

The sovereign bond market rollercoaster was still very much in play yesterday with the brutal sell-off in government paper extending to send benchmark yields to yet another yearly high. Elements of calm briefly returned early in the session after soft Chinese macro data spurred bets of further policy easing although this proved to be short lived. 10-year Bunds yields led the upwards lurch as soon as the first estimate of 1Q eurozone GDP was released which revealed the bloc expanded by a solid 0.4% and an improvement over the 0.3% clocked up at the end of 2014. The encouraging data was attributed largely to forecast-beating performances by Italy and France, the latter growing by a sprightly 0.6%, and was the first quarter in which the zone’s four largest economies all expanded since 2Q 2010.

A slight dip in euro-area industrial output and a return of Greece to technical recession did little to lift appetite for perceived havens while a strengthening euro weighed on the region’s equity indices. The single-currency was given a big lift by disappointing US core retail sales which came in unchanged in April from the previous month and sent the dollar index down to a three-month low while also undermining hopes of a 2Q rebound.

The subdued data has all but ruled out a June lift-off in rates and the frequent paring back of the US rate normalisation timeframe is likely to keep the dollar under pressure, evidence of which can be seen by the euro briefly breaching $1.14 this morning. The Bank of England attempted to quell uncertainty over its own monetary policy as it released its quarterly inflation report in which it trimmed UK growth forecasts for the next three years while keeping its inflation projections little changed with a 2016 rate rise still firmly on the cards.

to read the rest of the report, please click here

Posted by Stephen Brennock

Stephen Brennock joined PVM in 2013 after having worked as a project manager for a business development firm. He graduated with a degree in Business Management in 2007.