Newsletter – 5th July 2018

Morning Bulletin

Yesterday

  • There was literally no data of any significance released after 9.30am yesterday morning as the United States celebrated Independence day.
  • UK Services PMI was in fact the only high impact print and it didn’t disappoint with the reading of 55.1 bettering the expected 54.0. That meant the UK Services sector grew at its fastest pace in 8 months and has further added to the case for the BOE to potentially hike rates in August.
  • With no other data set for release that solid Services print almost ensured that Sterling should perform well in FX space and that proved to be the case, with the Pound making gains of +0.12%, +0.27% and +0.24% against the Euro, US Dollar and Aussie Dollar respectively.
  • Prior to the UK figure we also saw the release of Eurozone Final Services PMI which came in-line with expectations at55.2.
  • Speaking yesterday Irish Prime Minister Leo Varadkar said a hard Brexit is unlikely but that people must be prepared.
  • The issue of Migration continues to threaten to throw the EU into disarray, with the latest chapter following Chancellor Merkel’s deal struck to appease her interior minister and keep her unstable Government together. The proposals for transit zones along the Southern German border have been met with anger by Austria and Italy who have both said they plan to reintroduce border controls should Berlin go ahead with these plans.

 

Overnight

  • The Euro has rallied this morning following reports that a number of ECB members are uncomfortable with the markets current expectations that a rate hike would not come until December 2019, suggesting they believe a hike could be appropriate sooner than that.
  • According to the FT UK PM Theresa May’s plans for a ‘facilitated customs arrangement’ has been rejected by a number of key Tories.
  • German Factory Orders m/m 2.6% (1.1% Exp)
  • Swiss CPI m/m 0.0% (0.1% Exp)
Today
  • Bank of England Governor Carney is due to speak at 11am this morning. Following a run of solid UK economic data, markets will be listening closely for any indications that Carney could favour hiking rates in August.
  • US Employment data headlines this afternoon with employment change and overall unemployment rate due between 1.15pm and 1.30pm.

 

Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1320 -0.24
GBP/USD 1.3244 +0.14
EUR/USD 1.1695 +0.34
AUD/USD 0.7382 +0.03

 

Time (GMT) Region Data Release Forecast Previous
09.10 EUR Eurozone Retail PMI 51.7
11.00 GBP BOE Gov Carney Speaks
12.15 EUR ECB Member Weidmann Speaks
12.30 USD Challenger Job Cuts y/y -4.8%
13.15 USD ADP Non-Farm Employment Change 190K 178K
13.30 USD Unemployment Claims 231K 227K
14.45 USD Final Services PMI 56.5 56.5
15.00 USD ISM Non-Manufacturing PMI 58.3 58.6
19.00 USD US Fed FOMC Meeting Minutes