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Trump on tour

Trump on tour

GBP
The UK CBI industrial trends printed the highest reading since February 2015 at 9, while export orders were at the highest level since December 2013. Sterling moved back above the 1.3000 level against the Dollar on Friday but failed to break above the 1.3050 level. The Euro tested the 1.1630 resistance area. The Rightmove house price index rose 1.2% in May for a 3.2% annual gain.

Opinion polls have suggested that the Conservative’s lead has narrowed over the past few days and any further narrowing could trigger some market anxiety over the election outcome. Brexit Minister Davis warned that the UK would walk away from talks if the exit bill was excessive. This maintained expectations of underlying tensions once the negotiations start from June 19th.

USD
The Dollar gained some ground in trading this morning as the recent effervescence in the US political scenario seems to have subsided somewhat following the ‘Russia-gate’, while expectations of a Federal reserve (Fed) move at the June meeting return to the fore. According to CME Group’s FedWatch tool, the probability of higher rates next month is at 78.5% based on Fed Funds futures prices.

Today, Trump will be arriving in Israel for a visit to some of the most hotly-contested real estate in the world; expect “wall to wall” action, so to speak, and perhaps talk of peace. That’s ahead of his next step, to see the Palestinians; then on to see the Pope; then to talk to the EU in Brussels; then to see NATO; and then to the May 26-27 G-7 meeting. In short, most of the key global hot topics, and no doubt with an increasingly fatigued Trump, who will also be listening for what Mr. Comey has to say about him on Wednesday.

Event wise today in the US, speeches by FOMC’s L.Brainard, Philly Fed P.Harker and Minneapolis Fed N.Kashkari should keep the attention on the Buck ahead of the publication of the FOMC minutes on Wednesday.

EUR
The EURUSD pair made several attempts to hold above 1.1200 handle in the overnight trades, but in vain, as the bears took over control. This extended the retreat in the spot from fresh yearly highs of 1.1214 reached last Friday.

With regards to the GBPEUR pair, on Friday, Sterling trading was primarily driven by the broader moves in the Euro (and Dollar). GBPEUR held a very tight sideways range in the high 1.1600 area.

With a number of higher tier data out this week there could be some significant movement regarding GBP against all it major pairs. Prime Minister Theresa May is speaking this evening at 18:00, inflation report hearings are on Tuesday, and Second Estimate GDP q/q is released on Thursday. This is an interesting space to watch.

Data to Watch:
1:30pm USD Chicago Fed National Activity Index (Apr)
6pm Theresa May Speech

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