Morning Comment 23.07.19
The Euro is eyeing up 1.1180 support vs. the Dollar after the US developments on the debt ceiling overnight (see US section). Yesterday an ECB sources piece did the rounds, indicating that the Central Bank were likely to revise its forward guidance at the coming meeting this Thursday, but allegedly hold off on other stimulus moves – according to some ECB officials. For the day ahead it’s light in terms of data with only consumer confidence released in the afternoon (expected unchanged at -7.2).
Consumer Confidence @ 3:00pm.
Sterling again opening up the day trading just below the 90p mark vs. the Euro, with all eyes naturally turning to the results of the Conservative leadership contest at 11:00am. Boris Johnson is widely expected to win, and in the case he does, he’s expected to form his cabinet by Thursday. We’ve seen some MPs depart over the past number of days due to Johnson’s demand that ministers must be willing to accept a ‘no-deal’ scenario, and we may see more in the event of Johnson being confirmed.
CBI Business Optimism @ 11:00am.
The Dollar opens the day on firm footing after the Trump administration and Congressional leaders reached an agreement to avoid automatic budget limits and suspend the debt ceiling for two years. The deal (which includes more than $2.7 trillion worth of spending over the next two years) still needs to be passed by both chambers before getting President Trump’s signature, but has seen a small bid to the USD/US rates. For the day ahead it’s light in terms of domestic drivers.
Richmond Fed Manufacturing Index @ 3:00pm, Existing Home Sales @ 3:00pm.
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22 Jul 2019
Morning Comment 22.07.19
This week is an important week for the Euro, which has been under pressure as markets look toward the ECB meeting this Thursday. Expectations are for a dovish message, with the Central Bank likely to signal interest rate cuts and the potential for further quantitative easing down the road. Markets are pricing in around a 50% probability of a 10bp cut to the deposit rate at this meeting. This week also sees the release of European PMI data – albeit the trend of weak manufacturing activity deviating with stronger services activity is expected to remain.
No data of note today.
The amendment votes on the Northern Ireland bill last week saw some short positioning in Sterling getting reduced, and as such had EUR/GBP trading below the 90p mark as we closed the week. Voting for the next PM finished on Sunday, so naturally all eyes on the announcement of the next PM this coming Tuesday. According to a report from the Times over the weekend, the European Commission are drawing up a contingency aid package for Ireland, with a senior EU diplomat stating the bloc would spend whatever was necessary to support the Irish government.
No data of note today.
A directionless week for the Dollar last week, with the Greenback being driven by commentary from Fed members in recent sessions – albeit this week sees the Fed in blackout period ahead of their meeting on July 31st. Data last week was also solid, with the Philadelphia Fed outlook survey showing a strong rebound – heightening questioning by market participants on why the need for a 50bp cut. This week it’s relatively quiet – we get Q2 GDP and Core PCE inflation data – which will naturally be watched given the more optimistic picture painted by recent data.
Chicago Fed National Activity @ 1:30pm
17 Jul 2019
Morning Dealer Comments
Euro/Dollar slid yesterday after the worse than expected ZEW survey out of Germany (-24.5 vs. -22), showing a fall for three consecutive months now. Adding to the Euro downside was the stronger retail sales data in the US (see US section). Yesterday evening, Ursula von der Leyen was confirmed as the next European Commission President, who may display more leniency in her post for populist governments given her reliance on their support for her candidacy. For today Eurozone CPI will be the only release of note (1.2% exp)
CPI @ 10am
Sterling weakness continued yesterday as EUR/GBP traded up towards 0.9050 while GBP/USD made new year to date lows and traded to levels not seen since April 2017. Yesterday’s employment data was largely in line with expectations (earnings was strong, but ignored) however the Pound fell after headlines regarding the difficult task for UK Parliament to stop no deal – without a motion of no confidence in the UK government. The main event for today is the release of UK CPI and PPI.
CPI YOY came in as expected 2%
The stronger than expected retail sales data out of the US yesterday pushed the Dollar higher across the board. President Trump was on the wires yesterday also, with a more hawkish stance on China by stating he could potentially put tariffs on the rest of the $325bn. of Chinese exports, causing a slight stir for more risky assets. Fed Chair Powell was also on the wires yesterday with some interesting comments, underlying the importance of the interconnectedness of US monetary policy
FED Beige Book @ 7pm
16 Jul 2019
Morning Comment 16th July 2019
A quiet start the week for the Euro despite some reports that the US are preparing $7bn of tariffs (see the links section below). Today the EU Parliament is expected to ratify von der Leyen as Commission President while there is some focus on what tools are available to the ECB to provide further monetary accommodation. Euro/Dollar continues to trade in a narrow range below 1.13 ahead of today’s data; in the morning we get German ZEW data along with Italian Inflation figures.
German ZEW @ 10:00am
Sterling continues to come under pressure, pushing above 90p resistance against the Euro and edging closer to the all-important 1.2440 support against the Dollar which has been the year to date low on a couple of occasions. Some UK newspapers have reported of tough talks between Brexit secretary Barclay and EU Chief Negotiator Barnier over the last week while on the economic front, today sees the latest UK employment data which will be closely watched given the recent run of poor domestic data.
UK Employment @ 9:00am
The Dollar was the weakest currency in G10 last week but consolidated some of those losses yesterday; the Greenback was helped by better than expected Empire Manufacturing data in the afternoon. Today see’s focus on top tier data in the afternoon; first up is US Retail Sales which is followed by the latest Industrial Production numbers. On the political front, the US Debt Ceiling is coming back into focus with ongoing discussions in Washington.
Retail Sales @ 1:30pm.
Industrial Production @ 2:15pm
4 Jul 2019
Morning Comment 04.07.19
The Euro remains effectively rangebound, and will likely be quiet for the day ahead with the US out on holiday for the 4th of July. President Trump was on the wires yesterday again complaining about Europe’s “big currency manipulation game”, albeit had little effect on the Euro for now. The day ahead sees the release of Eurozone retail sales – albeit unlikely to be a material driver in the near-term.
Retail Sales @ 10:00am.
UK Composite PMI came out weaker than expected yesterday; the indicator has fallen below 50 – into contractionary territory – for the first time since the Brexit Vote in 2016. The reading put pressure on the Pound with Euro/Sterling once again threatening to trade above 90p on the day. Today is likely to be quiet given a lack of data and the holiday in the US; tomorrow sees Halifax House Price figures released.
No data of note today.
Comments from President Trump yesterday again indicating his mounting frustration with the strength of the Dollar, albeit having little effect on FX markets. What we do know is that the President has the ability to weaken the Dollar by ordering the US Treasury to conduct FX interventions (selling USD through the Exchange Stabilizaiton Fund) – albeit the ESF balance sheet is relatively small. For today the US are out, and it will be quiet ahead of payrolls tomorrow.
No data of note today.