Morning Call

The Ernst & Young Item Club said persistently high inflation had knocked almost 3 percentage points off the economy over the past three years and was set to remain above the Bank of England's 2 per cent target "for the foreseeable future" - The Independent The Conservative party over the weekend has come under attack following a national paper printing comments said to have been made by a senior Tory official stating grassroots party members were “swivel-eyed lo…

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The London Stock Exchange now makes more money from its by-product 'data' than from its core capital markets business - CityAM SNB will cap Franc as long as deflation risks persist - Bloomberg Yen remains weak, with many strategists recommend buying on dips, currently trading above 102Y Gold trades below $1400/oz Following the preliminary GDP figures, Japan’s Economy Minister Amari said the effects of Abenomics are beginning to appear EURUSD the ye…

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On Tuesday as the FTSE 100 closed at a 5 and half year high, as the potential takeover of utility company Severn Trent. Equity indices in Europe and the US have powered higher, fuelled by investors search for a return. The prolonged period of record low yields on government paper, and the cost of debt financing has led to an increase in M&A activity. The dollar has been strong across the board, reaching multi-week and month highs against all of the majors. The depreciation in the Y…

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Articles in the press are highlighting the recent data from the UK and how the economy is starting to show signs of the long awaited recovery: The CBI predicts that the UK GDP will grow by 1% this year and 2% next. The ONS now believes that the UK avoided the publicised and heavily criticised “double-dip” recession The Telegraph reported on Monday that Governor of the Bank of England Mervyn King might revise their growth forecast higher before he steps down in…

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The Bank of England is to make its monthly interest rate announcement alongside any further changes to the asset purchase facility at 12pm. The consensus is that the central bank will refrain from making any changes from the current course of quantitative easing (£375bn) and interest rates on hold at a record low 0.50%. There are expectations that the MPC will wait until Mark Carey becomes governor before increase the current level of asset purchases. Recent macro data from the UK has…

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Global equities markets soared yesterday with some bourses printing all-time highs. To those outside of the investment community the equity rally seems in contrast to economic news. -FTSE 100 closed at 6,557.30 the highest level since December 2007 -DAX closed at 8,181.87 an all-time high -Dow Jones Industrial Average rallied to close above the psychological 15,000 level for the first time The rally has been fuelled by cheap money, from the historically low borrowing…

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The two main macro releases of the day will be UK PMI services at 9:30am (London), and the US employment report, Non-Farm Payrolls (NFP). The recent economic releases from the UK have shown signs of potential growth, and a better than expected services PMI this morning, is likely to put a bid into sterling in the FX markets. It is the first Friday of the month, which means that it is ‘Non-Farm Friday.’ The US employment report will be released at 13:30pm (London)and as alwa…

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European Central Bank Meeting Thursday 2nd May 2013 The European Central Bank (ECB) as expected has cut interest rates by 25bps to 0.50%. -44 of the 70 economists surveyed expected the ECB to cut by 25bps -1 economist predicted a 50bps cut -Standard Chartered, CitiGroup, Credit Suisse, Commerzbank, JPMorgan, Goldman Sachs, Barclays and Deutsche all expected the ECB to cut rates by 25bps The macro data coming from the Eurozone has been mixed, with a two tiered No…

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The US Federal Reserve hinted that it may accelerate their current quantitative easing programme. The FOMC said that they were “prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labour market or inflation changes.” The disappointing data from the US and stubbornly high unemployment is a concern to the Fed, citing the fiscal policy from Congress responsible for restraining economic growth. Facebook re…

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China's sustainable and stable economic growth offers great opportunities to the world, Chinese Premier Li Keqiang said on Sunday Japan’s new stimulus policies have led to a sharp revival in demand for traders in Japanese bonds, equities and currencies, with “Abenomics” fuelling trading volumes in those markets - Financial Times The Spanish economy contracted at a slower pace in the first quarter of 2013, preliminary data released by the statistical office I…

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Cable traded to a 10 week high on Sterling strength, as investors believe that there the Bank of England will not do any further quantitative easing. This was compounded with the better than expected GDP figure, and avoided the anticipated triple-dip recession. The macro data from the UK was in contrast to the United States growth figures released on Friday, which were below expectations. Reuters sights the 1.5574 level as the next level of technical resistance for GBPUSD as it is the 100 da…

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On Thursday the eagerly anticipated preliminary reading for UK GDP Q1 from the ONS showed that the UK had avoided a dreaded triple-dip recession, for now. Chancellor, George Osborne has been under considerable pressure to change course away from the current path of austerity. Following consecutive readings of poor economic data, criticism from the IMF and a downgrade by Fitch, Osborne has some briefing space. The ONS expect the UK economy to grow by 0.3%, which might be the milestone remembe…

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The Office for National Statistics (ONS) releases its preliminary UK GDP estimate for the first Quarter of 2013 at 9:30am (BST). Economists are expecting a marginally positive print of 0.1%, however a contraction would show that the UK economy has gone back into a recession for a third time since the credit crunch in 2008. A “triple-dip” recession could lead rating agency S&P to downgrade the UK’s credit rating from its top notch of AAA, on the 5th April S&P said&ld…

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What’s in a Tweet? Well a hacked Twitter account of the international news agency the Associated Press sent markets into turmoil after it stated “Breaking: Two Explosions in the White House and Barack Obama is injured” (April 23rd 2013). Algorithms reacted to the story creating a mini flash crash as the Dow dropped 150 points before recovering; following the release that the release was a fake. This all happened in matter of minutes, bringing a few highly contentious…

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