Newsletter – 4th July 2017

Morning Bulletin

Yesterday

  • Despite an early morning rally which saw the Pound touch 1.1418 and 1.3022 against the Euro and US Dollar respectively, shortly after Sterling was put on the back-foot for the rest of the days trading.
  • That bout of weakness followed the disappointing Manufacturing PMI print of 54.3, which represented a 3-month low and fell comfortably short of the expected reading of 56.4. Despite the print still showing that UK Manufacturing is in expansionary territory, it was concerns and doubts around future demand that hit the Pound hard.
  • Having reached the aforementioned highs, Sterling slumped to close the day down around 1.1388 and 1.2940 against the Euro and US Dollar respectively.
  • There were also a raft of Manufacturing PMI prints out of some of the larger European Member states yesterday morning, culminating in the overall Eurozone Manufacturing PMI print of 57.4. This figure has now improved for the 10th consecutive month as the Eurozone economy continues to gather momentum.
  • According to the Spanish Government their economy will grow 3% in 2017, up from a previous estimate of 2.7%. They also upped their 2018 forecast from 2.5% to 2.6%.
  • Despite a number of cabinet ministers publicly voicing their opposition, a spokesman for UK PM Theresa May said the Government’s policy on public sector pay will not change, however they would listen to recommendations later in the year.
  • There were a number of US data releases yesterday afternoon:
    • ISM Manufacturing PMI 57.8 (55.0 Exp)
    • Construction Spending m/m 0.0% (0.3% Exp)
    • Final Manufacturing PMI 52.0 (52.1 Exp)
Overnight
  • As expected the Reserve Bank of Australia kept rates on hold at 1.50% overnight. Whilst Governor Philip Lowe acknowledged there had been some positive signs in the jobs market, the Central Banks’ overall bias remained neutral, with hopes of a gradual improvement in the economy through to the end of 2017.
  • The Aussie Dollar was sold off in FX space following this news, as markets and investors may have been looking for slightly more hawkish rhetoric from the RBA Governor.
  • Australian Retail Sales m/m 0.6% (0.2% Exp)
  • New Zealand NZIER Business Confidence 18 (17 Previously)
  • Bank of Japan Core CPI y/y 0.3% as expected.
  • Spanish Unemployment Change -98.3K (-120.3K Exp)
Today
  • Our only key figure today comes at 9.30am in the form of UK Construction PMI with an expected print of 55.0.
  • Very little due for the rest of the day, however we do have two ECB member’s speaking later this afternoon and as always their comments will be closely scrutinised.
  • Please be aware that it is of course Independence Day in the United States.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1395 +0.06
GBP/USD 1.2946 +0.06
EUR/USD 1.1363 +0.00
AUD/USD 0.7608 -0.68

 

Time (GMT) Region Data Release Forecast Previous
09.30 GBP Construction PMI 55.0 56.0
10.00 EUR Eurozone PPI m/m -0.2% 0.0%
13.30 EUR ECB Member Praet Speaks
14.30 CAD Manufacturing PMI 55.1
16.00 EUR German Finance Minister Speaks
17.00 EUR ECB Member Nowotny Speaks
TBC NZD Global Dairy Trade Price Index -0.8%