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June

Pound benefits from positivity

Published: Wednesday 06 June 2018

  • Eurozone gets some good news on retail data
  • Commodity currencies strengthen overnight
  • Lack of data leads to riskier appetite for currency markets
​​By Charlie Horsley

Sterling bounced yesterday as there was finally some positive UK economic data. Strong UK service sector results yesterday raised the chances of the prospect of a UK interest rate hike in August. There is still two months of data between now and then, however, but a continuation of positive news like this will be the good news the Bank of England will need to instigate an interest rate increase.

Eurozone gets some good news on retail data

The latest Eurozone Retail Sales Purchasing Managers’ Index (PMI) showed a much stronger picture compared to last month’s downturn, with retail sales picking up in Germany and France, in particular. Sales are also up on an annual basis, allaying some fears from disappointing Eurozone data in previous months.
 
Commodity currencies strengthen overnight
 
Commodity currencies gained during the overnight trading session in Asia. It was reported that the Australian Gross Domestic Product (GDP) increased by 1% in the first quarter, boosted by household consumption, government demand and stronger exports. Year on year growth rose to 3.1% versus an expectation of 2.8%. The Aussie Dollar gained on the news, however, one piece of reasonable economic data is unlikely to alter the Reserve Bank of Australia’s (RBA) cautious stance and Australian interest rates are likely to remain on hold unless inflation begins to rise.
 
Lack of data leads to riskier appetite for currency markets
 
There is a lack of tier 1 data due to be released today, which should leave current currency trends in place. Equity markets are set to open higher, which would suggest that the risk we are seeing played out in the currency markets will continue into the European session. The upcoming G7 meeting this weekend may temper some of the current optimism, as US President Donald Trump will face his allies in Canada and the European Union for the first time since announcing that the steel tariff exemptions would lapse. Any escalation of the impending trade wars and market sentiment could sour rapidly.
 
Get this week’s full round-up of the currency markets and economic news.
A work of art

A kindergarten teacher was observing her classroom of children while they drew. She would occasionally walk around to see each child's artwork. As she got to one little girl who was working
diligently, she asked what the drawing was.

The girl replied, "I'm drawing God."

The teacher paused and said, "but no one knows what God looks like."

Without missing a beat, or looking up from her drawing the girl replied, "It’s a good thing I’m here then."

Today's Major Economic Releases

Market BST Data/Event Previous Expected
EUR 09:00 EU: Retail Purchasing Managers' Index 48.6 48.6
CAD 13:30 Canada: Trade Balance -4.1b -3.4b
CAD 13:30 Canada: Building Permits 3.1% -1.0%
USD 13:30 US: Trade Balance -49.0b -50.0b
USD 13:30 US: Revised Non-Farm Productivity 0.7% 0.7%
CAD 15:00 Canada: Ivey Purchasing Managers' Index 71.5 69.7
USD 15:30 US: Crude Oil Inventories -3.6m -2.0m

For more information, infographics and the latest currency insights, visit www.halofinancial.com/news