MIDDAY Brief – Industrial Data

The major theme during the early European session was US dollar weakness as the greenback tumbled to levels not seen since 2015 against the Swiss franc.

Elsewhere the EURUSD pair advanced above the 1.1160 area enroute to 1.1200 next, while the GBPUSD pair headed well above the benchmark 1.3000 handle.

Data showed that industrial production in the UK shrank 0.6% month-on-month in May 2023, slipping further from a downwardly revised 0.2% decrease in April and coming worse than the market forecasts of a 0.4% drop.

It also marked the sharpest fall since August 2022, mainly due to the large decline in production for electricity, gas, steam & air conditioning (-2% vs 0.7% in April). In addition, lesser negative contributions came from water supply (-1.7% vs -0.3%) and manufacturing.

Meanwhile, output rebounded for mining & quarrying (0.3% vs -2.4%). On a yearly basis, industrial production went down 2.3%, in line with market expectations and following a downwardly revised 1.6% fall in the previous month.

Industrial production in the Euro Area also rose by 0.2 percent month-over-month in May 2023, easing from a 1.0 percent increase the month before and slightly missing market expectations of 0.3 percent.

Capital goods production advanced by 1.0 percent, following a 14.7 percent jump in April, and intermediate goods output was up by 0.5 percent, rebounding from a 0.9 percent decline.

Output also increased for both durable goods (0.5 percent vs -2.8 percent) and non-durable consumer goods (0.3 percent vs -3.6 percent). On a yearly basis, industrial production slumped 2.2 percent in May, after a 0.2 percent gain in April.

Traders now await the release of Producer Price Inflation data. The PPI number is expected to fall as inflationary pressure starts to significantly reduce inside the United States economy.