Newsletter – 2nd July 2018

Morning Bulletin

Friday

  • There’s no doubt the Pound has endured a torrid couple of weeks but it did at least stem the tide and make back a little ground on Friday, and that was due to some better than expected UK economic data Friday morning.
  • There was a welcome revision to the UK’s first quarter growth of 2018, with the previous figure of 0.1% revised up to 0.2%. The main factor for the revision was the ONS scaling back their original estimate of the decline in construction output.
  • The UK’s current account deficit was also lower than expected during the first quarter of 2018, with imports outstripping exports by 17.7Bn, however that was slightly less than the -18.0Bn forecast and the -19.2Bn reading for the last quarter of 2017.
  • Following the release of the data the Pound managed to push back above the 1.1300 handle versus the Euro and importantly closed just above that level. Sterling had greater success against the US Dollar rallying from 1.3110 to a day’s high of 1.3207.
  • Headline Eurozone Inflation data came in-line with expectations at 2.0% y/y.
  • There were a good number of key prints out of North America Friday afternoon:
    • Canadian GDP m/m 0.1% (0.0% Exp)
    • Canadian RMPI (Raw Materials) m/m 3.8% (1.2% Exp)
    • US Personal Spending m/m 0.2% (0.4% Exp)
    • US Chicago PMI 64.1 (60.1 Exp)
  • The above Canadian GDP print saw the Canadian Dollar rally aggressively in FX space. This print for April, was the third consecutive month of growth for the Canadian economy and will have raised expectations of a potential hike later this year.
  • Speaking Friday afternoon ECB President Mario Draghi said a trade spat between the US and Europe could hurt the Eurozone economy more than currently anticipated.
Over The Weekend

  • Despite German Chancellor Angela Merkel striking a hard fought deal on migration at last weeks EU leader’s summit, it would appear her coalition Government still remains on the brink with reports that her interior minister (Chair of the CSU party) Horst Seehofer offered to resign over the weekend, dismissing the deal she had struck and accusing her of making ‘zero’ concessions in their dispute. Seehofer believes that the deal will in fact lead to more migration rather than less.
  • China Caixin Manufacturing PMI 51.0 (51.1 Exp)
  • China Manufacturing PMI 51.5 (51.7 Exp)
  • China Non-Manufacturing PMI 55.0 (54.7 Exp)
  • Japan Final Manufacturing PMI 53.0 (53.1 Exp)
Today
  • Manufacturing is very much the theme today, with Manufacturing PMI prints from Europe, the UK and America over the course of the day.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1306 +0.06
GBP/USD 1.3153 -0.38
EUR/USD 1.1631 -0.44
AUD/USD 0.7368 -0.46

 

Time (GMT) Region Data Release Forecast Previous
09.00 EUR Eurozone Final Manufacturing PMI 55.0 55.0
09.00 EUR Italian Monthly Unemployment Rate 11.1% 11.2%
09.30 GBP Manufacturing PMI 54.1 54.4
10.00 EUR PPI m/m 0.4% 0.0%
10.00 EUR Unemployment Rate 8.5% 8.5%
14.45 USD Final Manufacturing PMI 54.6 54.6
15.00 USD ISM Manufacturing PMI 58.2 58.7
15.00 USD Construction Spending m/m 0.5% 1.8%