Daily Brief

Daily Brief

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Movement for some

USD 

After a run of uninspiring US data the USD dug itself out of a hole on Friday with the retail sales and industrial production numbers. All three sales measures - overall, ex-autos and control group - went up by 0.5% in May. The headline number fell just short of the predicted 0.6% rise while the other two beat forecast. Industrial production increased by 0.4% and capacity utilization edged up to 78.1%. Those numbers, too, were better than expected.  

The only slight problem was the Michigan survey of consumer sentiment, which was two points lower on the month at a provisional 97.9. The report indicated that the decline was "due to tariffs as well as slowing gains in employment". Investors were inclined to go with the good data. They turned a blind eye to the sentiment survey and the USD was one of Friday's top performers.  

EUR

The euro was out of the running on Friday, unchanged against the GBP and a touch softer against the CHF. It is 0.6% lower against the USD.

Investors could not whip up any enthusiasm for Friday's low-importance Euroland ecostats and there were none at all this morning. European Central Bank president Mario Draghi will make an appearance this afternoon, making the opening remarks at a forum "20 Years of European Economic and Monetary Union".

CAD  

The Loonie abruptly abandoned its recent strong link to oil prices. Where WTI crude added 0.4% on the day the CAD fell 0.5% against the USD.  There were no Canadian economic data to justify the divergence and no comment from the Bank of Canada.

Today's agenda is almost as thin. The only data are for cross-border investment flows, which seldom impact the exchange rate.

GBP 

Sterling spent Friday on the retreat, coming under renewed downward pressure as a result of Brexit concerns. It is 0.6% lower against the USD.  The only relevant economic data came out early this morning. The British Chambers of Commerce has upgraded its growth forecast for 2019 from 1.2% to 1.3%. Unfortunately, there are downgrades for the following two years: 1.0% in 2020 and 1.2% for 2021. The BCC sees zero growth in the second quarter of this year, as producers run down the stockpiles built up ahead of the original Brexit date.  

The other UK ecostat released overnight was Rightmove's house price index, which tracks new listing by estate agents. It went up 0.3% in May and was unchanged from the same month last year.

On Sunday five of the six remaining contenders for job of prime minister took part in a TV debate. Four were ready for Britain to leave the EU with no forward-looking arrangement in place and one said - or at least did not deny - that he would suspend parliament to ensure a "hard" no-deal Brexit. Only one conceded that the October 31 departure date is unachievable.  

JPY

Investors were apparently in a more optimistic mood, with no need of the safe-haven security provided by the yen. The only economic data to affect it were the US retail sales and production numbers, which sent the JPY lower against the USD.

The JPY is 0.3% lower on the day against the USD.  

USD: Buoyed by sales and production data

USD: Buoyed by sales and production data

EUR: Sidelined due to lack of interest

EUR: Sidelined due to lack of interest

CAD: Disconnected from oil

CAD: Disconnected from oil

GBP: Brexit beauty parade

GBP: Brexit beauty parade

JPY: Hurt by decent US data

JPY: Hurt by decent US data

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