Jam or cream first debate not on G7 agenda
As the leaders of the G7; seven of the most advanced economies in the world are arriving in Cornwall for a three-day summit. Boris Johnson is likely to be late because the A303 is a nightmare near Stone Henge. No one has denied it but it would appear that the ‘jam or cream first’ question will not be debated at the summit.
UK house prices up 9.5% and retail sales up 18.5%
Meanwhile, UK house prices rose 9.5% in the year to May, according to Halifax. The chancellor’s support for the property market appears to have kept the ball rolling and there is a lot of talk about people reassessing their priorities now as more of them can work from home for some of the week.
We also heard overnight that the British Retail Consortium’s sale monitor was up 18.5% in May compared with the same month in 2020. We are bound to have some sparkling comparisons with the debacle of 2020 but it is still positive news. Other than a speech from the BOE’s Andy Haldane, there is not much of note on the British calendar today, so Sterling’s repeated attempts to get above $1.42 and €1.1650 will probably have a day off. The pound is slightly shy of both levels this morning.
Japanese GDP contracts less than forecast
We saw a contraction in Japan’s GDP overnight. The economy shrank by 3.9% when you compare Q1 2021 to the same three months in 2020. That wasn’t as bad as forecast and the GBPJPY rate barely flickered. That rate starts the day just below Y155.
After a very volatile few days around Chinese data, the commodity-related currencies have a very quiet Monday. A relatively benign 20 reading in the NAB Australian business confidence index kind of suited the mood of this quiet trading period. GBPAUD was sanguine and starts the day at A$1.8270. The GBPNZD rate is an equally calm NZ$1.9615 but the GBPCAD rate is a little more choppy. That’s at C$1.71 this morning, roughly in the middle of a cent wide range.
EU and South African GDP due today
I mentioned yesterday that the GBPZAR rate was below R19 for the first time in 17 months. Well, that didn’t last long. This pair dipped to 18.95 and bounced. We start Tuesday at 19.20. Maybe traders are taking profit or preparing for the South African GDP data at 1.30 GMT. That should be something like 2.5% growth but the bounce may suggest traders know (or think they know) better and the number will be an improvement on that.
There is a lot of Eurozone activity today. The German industrial production data, released earlier this morning, was much worse than expected. The 1.0% contraction hasn’t knocked the euro too much as traders prepare for the German ZEW economic sentiment survey and the Eurozone GDP data. The forecast for the Q1 data is a 1.8% contraction. Anything better or worse will shift the euro and, with the German data being subdued, worse GDP figures will have a greater impact than positive ones.
This afternoon brings job openings data from the US along with trade deficit numbers. The USD is unlikely to react significantly to those figures.
And a mother from El Paso, Texas has been arrested after she dyed her hair and went to school pretending to be her 13-year-old daughter. She did it because she wanted to test the school security and was only spotted in the final lesson of the day. So was she successful in making nearly a whole day or a failure for getting caught? That’s a debate.