Powell Day


Although it lost out eventually, the dollar was among the leaders on Tuesday during the New York session and overnight. It was only this morning in Europe that it had to give back some of its recent gains. The only ecostat of any consequence was the NFIB Small Business Optimism Index which fell to 103.3. Despite the downturn, optimism "remains at historically high levels", though "The Uncertainty Index rose substantially, increasing seven points to the highest level since March 2017".

The highlight for today will be Federal Reserve chairman Jay Powell's visit to the House Financial Services Committee to discuss the Monetary Policy Report, which he submitted to them last week. The interesting bit for investors is not the report itself but the probing questions from the committee and the way the chairman answers them.


Hard economic data from the euro zone this morning were limited to the industrial output numbers from France and Italy. Both showed worthwhile upward progress in May: Output in Italy increased by 0.9% on the month and in France by 2.1%. Also out this morning was the European Commission's latest Economic Forecast. Euro area GDP is expected to grow by 1.2% this year and by 1.4% in 2020, slightly less than previously projected.

Perhaps in reaction to the stronger-than-expected output data, the EUR moved higher as London got under way. It is up by 0.2% against the USD.


The Loonie inched higher against the USD, adding an almost unnoticeable 0.1%. It showed no reaction whatsoever to a 2% rise in oil prices. Nor did it seem to be affected by the data for housing starts and building permits, which headed in opposite directions.  Starts were up by 24.8% in June from the same month last year while permit issuance fell by a monthly 13.0%.

This morning the Bank of Canada issues its rate statement and Governor Stephen Poloz follows with a press conference. No change is expected to the BoC's 1.75% benchmark interest rate.


This morning's UK economic data were really quite respectable. Manufacturing and industrial production both increased by 1.4% in May, not as much as analysts had predicted but welcome positive progress nevertheless. The total trade deficit narrowed £4.6 billion to £12.6 billion in the three months to May 2019, due mainly to the trade in goods deficit narrowing £4.6 billion to £39.7 billion. Gross domestic product was estimated to have expanded by 0.3% in the three months to May.

In the House of Commons on Tuesday, MPs approved a measure that they hope will complicate matters for any Prime Minister who might wish to suspend parliament. It would not be enough on its own, though, to prevent the no-deal Brexit that investors fear. Sterling struggled on Tuesday and perked up this morning, leaving it just about unchanged on the day.


The JPY followed a rather different path than the other majors, bouncing along through the day and overnight for an eventual result of no change against the USD. It was in less demand than that other key safe-haven currency, the CHF, and lost 0.4% to the Swiss franc.

There was nothing to see in the domestic corporate goods price index data this morning. Producer prices fell 0.5% in June, export prices were down by 0.7% and import prices were 0.7% lower on the month.

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