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Success dependent on manufacturing our own fortune

Success dependent on manufacturing our own fortune

GBP 
UK GDP remained at 0.2% growth, as expected, for the first quarter of 2017, although real household incomes declined for the third quarter in a row. The savings ratio fell to the lowest level on record, raising concerns about the consumer spending outlook. The Pound gained as oil prices rose and there was further speculation that the UK is leaning towards an interest rate hike following recent rhetoric by Monetary Policy officials.

Sterling pushed above 1.3000 against the Dollar and closed just above this level for the first time in six weeks. Underlying political uncertainty limited Sterling support, and there was pressure for a more expansionary fiscal policy which could trigger fixed-income selling. PMI manufacturing will be the sole tier one data offering today.

USD

US Personal Consumption Expenditure (inflation) data was fractionally below forecast with both the headline and underlying rates at 1.4% for May. With the rate significantly below the 2.0% level, there were fresh doubts whether the Fed would be in a position to raise interest rates further over the next few months.

The University of Michigan consumer confidence index rose modestly and Chicago PMI saw a sharp increase to a three-year high of 65.7 from 59.4 the previous month. The CFTC data recorded a decline in long Dollar positions to the lowest level for almost 12 months which should limit the scope for a further overall sell-off.

EUR

German unemployment rose for the first time in almost two years and retail sales data was only slightly stronger than expected. Headline Eurozone CPI inflation declined to 1.3% for June from 1.4% previously, although this was higher than the consensus forecast of 1.2%, and the core rate increased to 1.1% from 0.9%. 

Markets overall continued to expect that the European Central Bank (ECB) would adjust monetary policy during the second half of 2017 and Eurozone bond yields continued to move higher. The Euro hit tough resistance close to 1.1450 area against the Dollar and corrected slightly lower.

Data To Watch:
8:55am EUR Markit Manufacturing PMI (Jun), 
9:00am Unemployment (May), Markit Manufacturing PMI (Jun), 
9:30am GBP Markit Manufacturing PMI (Jun), 
10:00am EUR Unemployment Rate (May) 
2:45pm USD Markit Manufacturing PMI (Jun) 
3:00pm ISM Manufacturing PMI (Jun), ISM Prices Paid (Jun), Construction Spending (MoM) (May)

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