On 13 June, the UK government revealed legislation that would allow it to scrap parts of the Northern Ireland protocol.
- Resilient UK manufacturing sector may shore up pound
- Canadian dollar vulnerable to manufacturing contraction
- Signs of manufacturing strength to boost US dollar
Stronger manufacturing PMI to offer pound boost
Worries over the economic impact of Brexit-based uncertainty could gain a boost this morning if the UK manufacturing PMI eases on the month.
Although the index is forecast to remain in positive territory in May any signs of the sector losing momentum could weigh heavily on the pound.
If the underlying details of the PMI report also point towards the sector remaining under pressure in the months ahead GBP exchange rates could see sharper losses.
An upside surprise from the index, however, may offer the pound some support in the midst of ongoing political anxiety.
Continued manufacturing sector contraction to weigh on Canadian dollar
Friday’s Canadian gross domestic product data proved encouraging, showing that growth rebounded from -0.1% to 0.5% on the month in March.
While the Canadian economy demonstrated a greater level of resilience in the first quarter this was not enough to prevent the Canadian dollar losing its footing ahead of the weekend.
CAD exchange rates could face further downside pressure this afternoon if May’s manufacturing PMI remains within contraction territory as forecast.
Evidence that the manufacturing sector is struggling in the second quarter may give investors further incentive to sell out of the Canadian dollar today.
US dollar to recover ground after surprise Mexican import tariff
The Trump administration’s decision to impose a surprise 5% tariff on Mexican imports saw USD exchange rates stumble on Friday, even as market risk appetite declined.
Investors are increasingly concerned about the likely impact of the current tariff regime on the US economy, limiting the appeal of the US dollar.
Even so, a rally could be in store for USD exchange rates this afternoon if the ISM manufacturing index strengthens on the month.
Signs of resilience within the US manufacturing sector would go some way towards easing market concerns over the economic outlook, to the benefit of the US dollar.
Monday, 3rd June 2019
09:30 GBP Manufacturing PMI
14:30 CAD Manufacturing PMI
15:00 USD ISM Manufacturing Index
Joining the corporate trading desk in 2007, Phil now over sees all of Currencies Direct’s corporate dealing activity. Having gained experience working with hundreds of businesses to optimise international payments processes and execute comprehensive risk management strategies, Phil currently works with a portfolio of corporate clients whilst managing Currencies Direct’s overall market exposure
Phil has FCA approval and has completed the Certificate in International Treasury Management (CertiTM)