Newsletter – 9th August 2018

Morning Bulletin

Yesterday

  • Sterling continued on its recent downward path on Wednesday. It registered its third consecutive day of losses against the euro and its sixth against the US dollar.
    • GBP/EUR opened at just above 1.1150 and fell by over half a percent to close at 1.1095 – the lowest close recorded since last September.
    • GBP/USD opened at 1.2939 and closed 0.45% lower at 1.2880.
  • News reports surfaced yesterday suggesting that Prime Minister Theresa May is stepping up the Government’s preparation in case of a ‘no deal’ Brexit. Bloomberg reported that May is planning a meeting of cabinet ministers early in September to specifically discuss the impact of Brexit should negotiation with the EU break down. This story can be interpreted by the markets as an increase in the likelihood of a ‘no deal’ Brexit and as such, sterling has continued to lose value across the board.
  • Following the poisoning of a former Russian agent and his daughter in the UK earlier this year, the Trump administration will impose more sanctions on Russia under a chemical and biological warfare law. The sanctions will be activated in mid to late August and the first goods to be sanctioned are so-called ‘dual use technologies’ which are thought to be used by the Russian military.
  • The Royal Bank of New Zealand kept rates on hold at 1.75% but it expected to keep rates on hold for longer than previously expected. It also lowered it’s GDP forecast.
Overnight
  • Chinese CPI y/y came in slightly better than expected at 2.1% vs 2.0%.
  • GBP/AUD and GBP/JPY both fell yesterday and currently trading at 1.7321 and 142.73.
  • Following the RBNZ releases last night, the Kiwi dollar lost value relative to sterling cause GBP/NZD to jump from 1.9087 to 1.9316.
Today
  • We expect NHPI m/m from Canada at 1.30pm alongside PPI m/m, Core PPI m/m and unemployment claims from the US.
  • At 11.30pm we will see the release of business manufacturing index from New Zealand.
Currency Pair Interbank Rate % Change on Day
GBP/EUR 1.1094 -0.01
GBP/USD 1.2856 -0.18
EUR/USD 1.1589 -0.18
AUD/USD 0.7420 -0.10
Time (GMT) Region Data Release Forecast Previous
13:30 CAD NHPI m/m 0.0% 0.0%
13:30 USD PPI m/m 0.2% 0.3%
13:30 USD Core PPI m/m 0.2% 0.3%
13:30 USD Unemployment Claims 220K 218K
23:30 NZD Business NZ Manufacturing Index 52.8