United States Dollar: It was good day on the data-front from the States yesterday as Retail Sales beat forecast after Mays lacklustre numbers. The core reading showed 1% monthly growth and the overall reading 1.2% however USD reaction to the positive numbers was a little strange as it lost ground against both the pound and the euro. At the same time US Unemployment Claims posted a sub 300k number for the 14th consecutive week. Despite this day of good data the last few months have been mixed at best, the economy contracted in Q1, there was a dismal April Non-Farms and CPI is running at an annual rate of -0.2%. These factors combined mean it seems implausible that the Fed will start hiking rates at next week’s FOMC meeting with most economists split on whether lift off will be in September or December. Cable trades at 1.5510 ahead of today’s PPI and Consumer Sentiment releases from the US. There’s been no data of note from the UK in the past 24 hours with the next big release Tuesdays CPI number.
We expect a range today in the GBP/USD rate of 1.54 – 1.5565
Euro: Pressure has been piled on Greece’s new Syriza government over the past 24 hours as the IMF withdrew its team from the negotiating table over differences which appear to be insurmountable. The minor concessions this week from Greece didn’t go far enough and there remain deep divisions over cutting pensions and raising taxes. The IMF will be attending Eurogroup meetings next week so this move could be seen as an act of brinksmanship by Christine Lagarde and co however the walk-out has done nothing to bolster confidence that a resolution will be found. Despite this worrying development EUR/USD remains above 1.12 as improving economic data, rising yields (10 year Bund yields topped 1% this week) and a pick-up in inflation have supported the shared currency. The end of the month could finally see Greece enter a make or break situation with a bundled up IMF payment of €1.5B due as well as public sector pay/pensions and other debt obligations owed. GBP/EUR trades at 1.3815.
We expect a range today in the GBP/EUR rate of 1.3720 – 1.39
Aussie and Kiwi Dollars: Overnight has seen Business NZ Manufacturing Index PMI print 51.5 slightly down from the 51.7 last time. The Kiwi is lower still today after the dramatic sell-off on the back of the RBNZs unexpected rate cut mid-week. GBP/NZD is at 2.2225 its highest level since the Christchurch earthquake in 2011 and NZD/USD is back under .70 at .6975. GBP/AUD is at 2.0110 and AUD/USD trades at .7710.
We expect a range today in the GBP/AUD rate of 1.9990 – 2.02
We expect a range today in the GBP/NZD rate of 2.2120 – 2.2350
AUD: No data
EUR: No data
GBP: No data
NZD: No data
USD: PPI m/m; Core PPI m/m; Prelim UoM Consumer Sentiment
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