Good morning,

Message to Macron: good luck

The euphoria of Macron’s victory on Sunday seemed to settle abnormally quickly yesterday. The over-arching reaction to the election seems to be a resounding “good luck”. While Emmanuel’s done the tough bit, he’s still got to form a government and deal with the National Assembly legislative elections in just over a month’s time. At these elections, 577 constituencies across France and her territories will vote for parties from across the political spectrum. Marine Le Pen’s Front National are expected to be well represented, along with the Republicans, the Socialist Party and Mélenchon’s far-left socialists.

This division of the National Assembly will make it more difficult for Macron to form a serviceable majority and he may even be forced to form a coalition when the dust settles in mid-June. Currency markets are well aware of this and the euro ended the day lower by around 0.75% against the dollar and 0.5% against the pound.

Sluggish commodities drag CAD, AUD lower

While you can criticise politicians far and wide for being opaque and hypocritical, OPEC delegates are surely masters of the art as they promise time and again to slash oil output in their respective countries but sneakily maintain (or even increase) the flow in the taps. Over the past few weeks crude oil prices have shed upwards of $10 per barrel, knocking off well over 15% of the ticket price and sharply cutting the revenues gained by many oil dependent nations.

As such, yesterday’s chin-wagging from OPEC delegates that deeper production cuts could be forthcoming in the second half of this year managed to stem the flow in the oil markets, but the AUD and CAD have been left in the doldrums.

High street in pain, but Easter brings brief relief

Consumption on the high street remains a sore point for the UK economy; just a few weeks ago UK retail sales for March contracted by close to 2.0%. Nonetheless, evidence that this lacklustre reading could just be down to calendar effects (a late Easter) rose this morning with the British Retail Consortium’s retail sales monitor, which showed April sales numbers up 5.6% on the year. The pattern within the data is also telling, with food and drink sales the key driver behind the rise, meaning a longer-term acceleration in consumption is unlikely.

Today’s calendar remains quiet, with UK watchers holding tight until Thursday’s Bank of England deluge as the Quarterly Inflation Report, rate decision and meeting minutes all cross the screens.

Have a great day.