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Boris Insists We're Off

GBP

After a positive start yesterday, Sterling was unable to make further headway. Political factors remained significant with Boris Johnson’s insistence that the October 31st Brexit deadline would not be extended, undermining sentiment to some extent as underlying fears over a ‘no-deal’ outcome increased. 

The CBI distributive sales index recorded further deterioration in June with a reading of -42 from -24 the previous month and well below consensus forecasts. Although adverse weather conditions are likely to have had at least a limited impact, retailers were also pessimistic over the outlook for July.

Sterling was unable to sustain initial gains and dipped lower yesterday evening with the Euro advancing to the 1.1140 area while there was a retreat to below 1.2700 against a firmer Dollar. Markets will be monitoring Bank of England (BoE) rhetoric today with the UK currency initially unable to make headway. 

USD

The US Philadelphia Federal Reserve (Fed) non-manufacturing index declined to 8.2 for June from 17.3, although components were mixed. June consumer confidence declined sharply to 121.5 from a revised 131.3, the weakest reading since September 2017 and well below expectations. New home sales declined to an annual rate of 626,000 for May from a revised 679,000 previously. The data overall maintained unease over the outlook, especially with consumers less confident over the labour market. 

St Louis Fed President Bullard stated that inflation was below target and that the inverted yield curve contributed to his vote for a rate cut in June. He did, however, also consider that a 0.50% rate cut at the July meeting would be overdone. Chair Powell stated that the central bank is monitoring many economic metrics and not just one measure while unemployment is low and inflation running near the target. Powell also commented that many within the Fed see a case for more accommodation, but he does not want to overreact to single data points. He did take market concerns over low inflation seriously and could have an important influence while reiterating that the central bank was independent.

EUR

After reaching highs of 1.1400, the Euro was unable to hold its ground as the US currency stabilised after 4 straight days of sharp losses. Sentiment of the Euro may now be tilting to the downside as today's release of German GfK consumer confidence has come in slightly below expectations of 9.8, with a forecasted figure of 10.0 expected. Further along in the week, we have the G20 meeting on Friday, with Trump and Xi in attendance, Trade talks will likely dominate.

Today's data:

02:00 NZD RBNZ Interest Rate Decision  02:00 NZD RBNZ Rate Statement  06:00 EUR Gfk Consumer Confidence Survey (Jul) (Germany)  08:00 CHF ZEW Survey - Expectations (Jun) 09:00 EUR ECB’s Mersch speech  09:15 GBP BoE’s Governor Carney speech  N/A GBP Inflation Report Hearings  12:30 USD Durable Goods Orders (May)  12:30 USD Nondefense Capital Goods Orders ex Aircraft (May) 12:30 USD Durable Goods Orders ex Defense (May)  12:30 USD Durable Goods Orders ex Transportation (May) 15:30 USD Fed’s Daly speech  23:50 JPY Foreign Bond Investment (Jun 21) 23:50 JPY Foreign Investment in Japan Stocks (Jun 21) 23:50 JPY Retail Trade (YoY) (May) 23:50 JPY Retail Trade s.a (MoM) (May) 23:50 JPY Large Retailers’ Sales (May) 

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