EU concentrates on borders, not just Irish
The spectre of month-end Pound selling kept trading sentiment low. Irish Prime Minister Varadkar stated that no progress had been made on the Irish border issue and that Ireland would make preparations for the possibility of no UK Brexit deal. The Euro climbed past the 1.1286 level, a three-month high, and the Dollar pushed the Pound below 1.3050.
The Bank of England’s chief economist Andy Haldane stated that voting for a 0.25% increase in interest rates was not radical and that monetary policy would still be extraordinarily loose. Haldane added that consumer data since May had bounced back and Sterling stabilised rather than rallying convincingly.
The Lloyds business barometer for June and consumer confidence both produced mediocre results. The Euro peaked near 1.1250 but Sterling managed modest relief against the Dollar amid uncertainty over month-end flows.
The US Dollar traded lower yesterday, giving up some large early gains against the Euro as data showed inflation held above target in some German regions. Mixed signals from the ongoing trade dispute between the US and trading partners keep sentiment subdued and hence currencies traded within a narrow range.
Minneapolis Federal Reserve (Fed) member Kashkari stated that he was comfortable with raising interest rates to neutral which was a slightly more hawkish comment than usual. Head of the Atlanta Fed Bostic, however, stated that he was comfortable with slowing the pace of rate hikes. The Dollar maintained a firm tone but was unable to sustain its best levels as the Euro held above 1.1550.
Across the pond, Personal Income/Spending, inflation tracked by the PCE, the Chicago PMI, and the final gauge of US Consumer Sentiment are all due next.
Eurozone industrial sentiment was stronger than expected and German inflation data was slightly weaker than expected. Speculation over a very expansionary European Central Bank (ECB) policy will continue if Friday’s Eurozone inflationary release is weaker than expected.
The Euro is trading higher against the US Dollar and is at a near two-month high against the Pound. Focus on the EU Summit is continuing today.
Despite opposition from Italy, EU leaders were able to reach an agreement whereby new migrant centres will be set up in EU countries on a “voluntary” basis and restrict the movement of asylum seekers between EU states. The agreement helped boost
confidence in Chancellor Merkel’s position and the Euro spiked higher, although positioning also had a big impact as the single currency advanced to just above 1.1650.
Data to watch:
24h EUR European Council meeting
07:00 EUR Retail Sales (MoM) (May)
07:45 EUR Consumer Price Index (EU norm) (YoY) (Jun)
08:00 CHF KOF Leading Indicator (Jun)
09:00 EUR Unemployment Change (Jun)
09:00 EUR Unemployment Rate s.a. (Jun)
09:30 GBP Gross Domestic Product (YoY) (Q1)
09:30 GBP Gross Domestic Product (QoQ) (Q1)
09:30 GBP Mortgage Approvals (May)
10:00 EUR Consumer Price Index (YoY) (Jun)
10:00 EUR Consumer Price Index – Core (YoY) (Jun)
13:30 USD Personal Spending (May)
13:30 USD Core Personal Consumption Expenditure – Price Index (YoY) (May)
13:30 USD Personal Consumption Expenditures – Price Index (MoM) (May)
13:30 USD Personal Income (MoM) (May)
13:30 USD Core Personal Consumption Expenditure – Price Index (MoM) (May)
13:30 USD Personal Consumption Expenditures – Price Index (YoY) (May)
13:30 CAD Gross Domestic Product (MoM) (Apr)
14:45 USD Chicago Purchasing Managers’ Index (Jun)
15:30 CAD Bank of Canada Business Outlook Survey
18:00 USD Baker Hughes US Oil Rig Count
23:45 NZD Building Permits s.a. (MoM) (May)