The Pound edged higher against the Dollar in early Europe on Monday, although gains were capped below 1.2550. Political uncertainty continues to ruffle Sterling with markets still fretting over the risks of a ‘no-deal’ Brexit. Reported comments from EU Commission President nominee Von der Layen that a further extension was possible allayed fears to some extent. House of Commons members are still looking at ways to block any ‘no-deal’ outcome.
The US June employment trends survey declined to 109.5 from a revised 111.2 previously, but data had little impact. The Dollar overall gained from reduced expectations of the Federal Reserve easing and yield differentials between the Euro and Dollar widened slightly in the US currency’s favour. The Dollar also maintained a firm tone into the New York close with the dollar index at fresh 2-week highs as commodity currencies edged lower, although the Euro held just above 1.1200 with tight ranges prevailing. There was a sharp decline in long US Dollar positions according to the latest weekly data, lessening the risk of further liquidation. The Dollar holds firm on Tuesday with the Euro subdued in and around the 1.1250 this morning.
The Euro lost more than 100 pips against the dollar last week and started the day under modest bearish pressure on Monday with it struggling to find demand. After testing the 1.12 handle earlier in the American session, the pair staged a rebound and was last seen trading at 1.1215, losing 0.08% on a daily basis.
Monday’s Sentix data release showed that the investor confidence continued to deteriorate in July with the Economic Index dropping to its lowest level since November 2014 at -5.8 from -3.3 in June and missing the market expectation of 0.1.
With no data releases from the Euro area on Tuesday, markets will be waiting for speeches from the Federal Open Market Committee members Bostic and Quarles. Although Chairman Powell is also scheduled to speak tomorrow, his speech is unlikely to touch on the monetary policy outlook.
Data to watch:
05:45 CHF Unemployment Rate s.a (MoM) (Jun)
12:45 USD Fed's Chair Powell speech
14:10 USD Fed's Bullard speech
18:00 USD Fed's Quarles speech
18:00 USD Fed's Bostic speech
n/a NZD RBNZ's Governor Orr speech
Posted in Daily Market News on Jul 9 2019