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Greenback keeps Trump-ing the Pound

Greenback keeps Trump-ing the Pound

GBP
Sterling is trading lower around the 1.2720 level against the USD, after falling to 1.2691 overnight. The rate was the lowest seen since June 23 last year, as the market eyes the UK inflation data expected later today.

 

UK labour market data was mixed, with the increase in average earnings declining slightly to 2.4% from 2.5% previously. The headline unemployment rate declined to 4.0% from 4.2%, the lowest rate for over 42 years, although employment gains were slightly lower than expected.

 

The UK inflation data is due today, with the headline UK CPI expected to rise 2.5% YoY in July, while core inflation is seen rising 1.9% YoY at the same time. Focus shifts more to long-term inflation developments after the Bank of England hiked the interest rate at the beginning of August, ensuring it was the last hike for a long time.

 

USD

 

The Dollar had another good day yesterday, in which the USD index, tracking the Dollar against a basket of its major currency rivals, moved higher for the fourth consecutive week, and to its highest level in 2018.

 

The greenback is being supported by escalating trade tensions between the US and Turkey (apart from China and the EU), with Turkish officials announcing a boycott to US electronic goods, and with the situation around US pastor Brunson still unclear.

 

Later today sees the critical retail sales figures that will drop in at 12:30 GMT, alongside the regional manufacturing index release. Also of note is the US industrial production data and EIA crude inventories report for the NA traders.

 

EUR

 

The little data that did come out yesterday did not really have much of an effect on boosting the Euro. GDP growth was revised up to 0.4%, but industrial production numbers came in below consensus. The currency seemed indifferent to to the market data news, and it did not really have an effect on volatility.

 

On a slightly more positive note, there was a slight recovery in the Turkish Lira, which meant the Euro followed suit, however this was swiftly cut short by the strength of the Dollar. Towards the end of the session, the Euro-Dollar rate hit a 13-month low, around the 1.1320 mark, before a slight recovery.

 

There is virtually no data in the Eurozone today, aside from the UK (covered above), apart from the German Buba (Bundesbank) President Weidmann’s speech at 5 P.M., however not much volatility is expected.

 

Data to watch:

24h       EUR EcoFin Meeting

09:30    GBP Consumer Price Index (MoM) (Jul)

09:30    GBP Consumer Price Index (YoY) (Jul)

09:30    GBP Core Consumer Price Index (YoY) (Jul)

10:30    GBP Retail Price Index (YoY) (Jul)

10:30    GBP Retail Price Index (MoM) (Jul)

13:30    USD Retail Sales ex Autos (MoM) (Jul)

13:30    USD Retail Sales (MoM) (Jul)

13:30    USD Retail Sales control group (Jul)

13:30    USD Nonfarm Productivity (Q2)

14:15    USD Industrial Production (MoM) (Jul)

17:00    GER German Buba President Weidmann Speech

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