Trump impotence hampers Dollar
The Dollar remains under pressure as investors pull money from the Greenback, where enthusiasm for higher interest rates has been fading and re-distributed into currencies where the rate debate is heating up. The Dollar index is down almost 2% this week and is currently at its lowest since October.
Yesterday’s US economic data showed an upward revision to the first-quarter economic growth, which to some extent, was negated by an unexpected rise in the weekly jobless claims. However, this did little to stall the ongoing US Dollar slump.
Later during the day, the US economic docket will also be looked upon for some fresh impetus in the form of the US personal spending report and core PCE price index.
UK consumer lending rose to GBP 5.3bn in May, an 11-month high which raises concerns of excessive credit growth. Bank of England Chief Economist Haldane opined that the bank would need to look seriously at the possibility of raising interest rates to shield the poorest consumers from inflation.
Sterling pushed higher after the comments, although there was robust selling interest just above 1.3000 against the Dollar while the Euro found support close to 1.1390.
Dollar weakness was, however, the principal market focus as Sterling continued to challenge the 1.3000 level. Expectations of a more hawkish Bank of England tone continued to underpin the UK currency despite a decline in consumer confidence to an 11-month low. High volatility is likely on Friday, especially with month-end pressures.
German headline inflation rose 0.2% in June and the annual inflation rate increased to 1.6% from 1.4% the previous month. Bundesbank President Weidmann stated that an accommodative monetary policy was justified in principle, but he also stated that it was possible to disagree about the right level of expansion. This clearly suggests that he would be backing some removal of policy accommodation in the short term.
Eurozone bond yields continued to move higher with German 10-year yields at 3-month highs and expectations of a move to reduce monetary policy accommodation continued to provide net Euro support during the day.
Data To Watch:
7:00am EUR Consumer Price Index (EU norm) (YoY) (Jun)
8:55am Unemployment Change (Jun), Unemployment s.a rate (jun)
9:30am GBP Gross Domestic Product (QoQ)(YoY)(Q1)
10:00am EUR Consumer Price Index (YoY) (Jun), Consumer Price Index-Core (YoY) (Jun),
1:30pm USD Personal Spending (May), Core Personal Consumption Expenditure- Price index (MoM) (YoY)(May), Personal Consumption Expenditure (MoM) (YoY)(May), Personal Income (MoM) (May),
2:45pm USD Chicago Purchasing Managers’ Index (Jun)