Newsletter – 27th July 2018

Morning Bulletin

Yesterday

  • The ECB’s monetary policy meeting was the focus of yesterday’s trading, and arguably the main event of the week. As expected the key interest rate was left on hold at 0.00%. The main points that emerged from the ECB’s statement and accompanying press conference included:
    • Despite uncertainties within the global trade environment, the Eurozone economy remained on a solid and broad-based growth path.
    • The ECB is confident inflation will continue to converge at it’s target level, but a significant amount of monetary stimulus was still needed.
    • President Mario Draghi said that patience, prudence and persistence were key.
    • When pressed on a potential rate rise, Draghi said the ECB expect interest rates to remain at their present levels through to the summer of 2019 at least.
  • The Euro remained largely unchanged in FX space against the majority of its major currency counterparts following the ECB meeting, however it declined aggressively against the US Dollar.
  • And that was in fact a theme yesterday afternoon, with the US Dollar rallying across the board following the ECB meeting. The Dollar made those gains as investors appeared dissapointed by the slow pace of rate increases forecast by the ECB.
  • There was a raft of US economic data yesterday afternoon which all-in-all was slightly dissapointing, but failed to dampen the US Dollar’s advance in FX space:
    • Core Durable Goods Orders m/m 0.4% (0.5% Exp)
    • Unemployment Claims 217K (215K Exp)
    • Goods Trade Balance -68.3Bn (-67.0Bn Exp)
  • UK PM Theresa May’s latest Brexit plans appear to have hit a major stumbling block already, as speaking yesterday afternoon the EU’s Chief Brexit negotiator Barnier ruled out the UK being able to collect customs duties on behalf of the EU.
Overnight

  • Japan Tokyo Core CPI y/y 0.8% (0.7% Exp)
  • French Flash GDP q/q 0.2% (0.3% Exp)
  • German Import Prices m/m 0.5% (0.3% Exp)
  • According to a YouGov poll of just over 1650 people in the UK, 42% would be in favour of a referendum on the final terms of the Brexit deal with 40% against the idea. The remaining 18% said they didn’t know.
  • The IMF’s latest forecast for China’s GDP remained at 6.6% for 2018.
Today
  • European data was released very early today, so we now just have the two prints out of America with GDP at 1.30pm and Consumer Sentiment at 3pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1260 +0.01
GBP/USD 1.3113 +0.05
EUR/USD 1.1645 +0.02
AUD/USD 0.7387 +0.14

 

Time (GMT) Region Data Release Forecast Previous
13.30 USD Advance GDP q/q 4.2% 2.0%
15.00 USD Revised UoM Consumer Sentiment 97.1 97.1