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Good morning and welcome back, I hope you all had a restful and restorative long weekend.

The news of the killing of Usama Bin Laden gave markets a sugar rush yesterday of good sentiment with equities rallying, oil lower and, to the chants of U-S-A, the dollar higher. This, much like all sugar rushes, fades quickly however and while these markets finished in the direction they had moved, the extent lessened as we went on. Investors are still worried about the global macro-economic outlook and as such huge gains were never anticipated on the news of the Al-Qaeda leader’s death.

The European single currency strengthened against the major currencies as April’s Eurozone PMI for the manufacturing sector was revised upwards ahead of Thursday’s ECB meeting. This caused EUR/USD to reverse its early loss and hit fresh 2011 highs of 1.49 after the US’s ISM manufacturing index declined for the second consecutive month.

Thursday brings the latest Bank of England and ECB meetings with no change likely from both parties Pressures on wages are unlikely to cause the Bank of England to raise rates and given the 0.5% Q1 GDP was only on expectation then the growth picture also is probably unable to support some monetary policy tightening. We also suspect that the ECB will remain circumspect when it comes to this month’s decision and although inflation has remained high it looks like that they will abide my chatter that suggests a series of rises are unlikely.

The April UK manufacturing PMI is expected to come in little changed at 57.0 versus 57.1 in March, showing growth at an above average mark. We will also focus on the CBI’s retail survey today, which indicated a depressed pace to UK retail sales over Feb and March, but we hope that today’s figure may show a jump in the run up to Easter and the royal wedding. The release is due at 09.30.

Latest exchange rates at time of writing