EU Daily Market Wrap - 2nd May 2019

EU Daily Market Wrap - 2nd May 2019

Updated: May 3, 2019

Today's Highlights

  • BoE signals hikes ahead but cuts inflation forecast;

  • Russia misses productions cuts in April;

  • US Factory Orders rebound in March;

  • US Productivity surges most in 9 years;

Macro Review

The aftermath of last night's FOMC meeting looks clear, stocks down and US dollar up are clear signs of an hawkish reaction. The US Dollar is in a perfect storm from both worlds: domestic strength and foreign weakness disappointing those looking for a top in the greenback. On the other hand, Global equities take a dip after the FED sees the US economy on an "healthy path" expecting inflation to pick up again next year and backing the FED position of pausing only for this year with another hike planned for 2020. On the data front, today US factory orders and productivity rebounded, however worth investigating whether this is just a transitory effect due to raise in inventories - that also spiked Q1 GDP - or something more significant.

Global Equities took a dive after last night FOMC hawkish statement, as Chair Powell hints one more hike next year. US indices came off the recent highs, with SP500 retesting the 2900 level to the downside after last week breakout.

On the FX front, the US Dollar had another leg higher with the USD Index firmly above the 97 level ahead of tomorrow NFP release. The rest of USD counterparts traded negative with the EUR pulling back on the 1.1200 level after the release of US Factory Orders. GBP was volatile today after BOE signaled more hikes needed in case of Brexit deal but downgraded inflation forecasts for 2020. AUD briefly traded below the 0.700 level amid USD strength. 

Crude Oil dropped to $61 aftet Russia said to have missed April production cut. Important technical break to the downside. However, Long bets remain at year highs.

Gold took a dive to the 1260 level amid USD strength.

The Day Ahead

  • EU Inflation YoY (10.00 am);

  • US Non-Farm Payrolls and Jobs Report (1.30 pm);

EU Close

If you missed the morning briefing from the desk click HERE

Hope you enjoyed the session.

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