Newsletter – 17th July 2018

Morning Bulletin

Yesterday

  • Just the low key Trade balance data out of Europe yesterday morning:
  • Italian Trade Balance 3.38Bn (3.25Bn Exp)
  • Eurozone Trade Balance 16.9Bn (17.6Bn Exp)
  • Speaking yesterday Italian Deputy PM Salvini said exiting the Euro is not part of the new Governments plans.
  • The Pound was one of the stronger performers during yesterday morning’s trading, with GBP/USD edging as high as 1.3292 and GBP/EUR to 1.1342. That strength was however shortlived as Sterling was sold off amid rumours that Theresa May was prepared to cave in to the amendments tabled by the hardline Brexiteers ahead of the commons vote.
  • US Retail Sales were up 0.5% in June reinforcing expectations that the US will enjoy strong economic growth in the second quarter of the year. A reading of 0.4% had been expected. There was also a sizeable revision to May’s Retail Sales figure, with the initial figure of 0.8% revised up to 1.3%.
  • US Empire State Manufacturing Index 22.6 (20.3 Exp)
  • US Business Inventories 0.4% as expected
  • According to Bank of England Chief Economist Andy Haldane, on his visit to Wales, he saw signs of rising pay pressures which he believes could boost underlying inflation. Haldane shocked markets last month when he voted for a rate increase, and any evidence of growing pay pressures will no doubt strengthen his case to hike at the next meeting.
  • US Fed Member Kashkari says there is little reason for the Fed to raise rates much further unless there is a greater pick up in inflation or growth.
Overnight

  • Having caved into the additional demands of the hardline Brexiteers in her party, Theresa May’s amended Customs Bill scraped through parliament yesterday evening by just 3 votes, with 14 Tories rebelling against the Government.
  • Extraordinary statements and US President Trump do seem to go hand-in-hand, however last night his comments whilst standing next to Russian President Putin appear to suggest he backs the word of the Kremlin over his own intelligence agencies and it caused a storm of criticism back in the United States.
  • New Zealand CPI q/q 0.4% (0.5% Exp)
  • Minutes from the most recent Reserve Bank of Australia meeting revealed that policymakers believe the next move in interest rates is likely to be up should unemployment continue to fall and inflationary pressures continue to persist.
Today
  • Raft of UK data due this morning with jobs data in focus. Average earnings will be the most closely watched figure with growth of 2.5% expected.
  • Couple of pieces of US data set for release this afternoon, but Fed Chair Powell will be the highlight at 3pm as he testifies on the Fed’s semi-annual monetary policy report.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1290 -0.11
GBP/USD 1.3240 +0.04
EUR/USD 1.1727 +0.14
AUD/USD 0.7423 +0.05

 

Time (GMT) Region Data Release Forecast Previous
09.00 GBP BOE Governor Carney Speaks
09.30 GBP Average Earnings Index 3m/y 2.5% 2.5%
09.30 GBP Claimant Count Change 2.3K -7.7K
09.30 GBP Unemployment Rate 4.2% 4.2%
TBC GBP NIESR GDP Estimate 0.2%
13.30 CAD Manufacturing Sales m/m -1.3%
14.15 USD Capacity Utilization Rate 78.4% 77.9%
14.15 USD Industrial Production m/m 0.5% -0.1%
15.00 USD Fed Chair Powell Testifies
TBC NZD GDT Price Index -5.0%