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Daily Brief

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President Trump pulled back

USD

Investors were unable to get worked up about the USD on Thursday. For a second consecutive day it took last place in the major currency line-up, though with much smaller losses than it suffered around Wednesday's FOMC announcement. News that the White House had ordered, then called off, an attack on Iran made markets more confused than fearful, though it did tend to work in favour of the safe-havens.

Initial and continuing jobless claims were both fewer than forecast and the US current account deficit for Q1 was wider than expected at $130.4 billion. The Philadelphia Fed's manufacturing index was less horrid than the one from New York earlier in the week. Nevertheless, its 16-point decline to 0.3 looked fairly ugly.

EUR

Nearly four weeks on from the European elections the 28 EU leaders are still struggling to fill key appointments in Brussels. They yesterday scrapped the shortlist of candidates for the job of European Commission president because none of them appeared capable of winning the support of Europe's parliament.    

There was no shortage of economic data from the euro zone in the last 24 hours. Yesterday's provisional EC measure of Euroland consumer confidence unexpectedly deteriorated to -7.2 while today's provisional purchasing managers' indices were mostly better than forecast. German manufacturing was still at the rear with a 45.4 reading while German services topped the list at 55.6. The numbers had little impact on the EUR, which is 0.1% firmer on the day against the USD.

CAD

An up-and-down day for the Loonie left it 0.2% higher against the USD. The shape of its trajectory was very similar to that of WTI crude, which went up by just over 3%.

Thursday's only Canadian economic statistic was somewhat unhelpful to the Loonie. ADP's employment change report showed a loss of 16k jobs nationally, 11.2k of them in the construction sector.

GBP

It was also a single-statistic day for sterling. At £4.5 billion, public sector borrowing in May was more than half a billion less than forecast. Sadly, the previous month's £5 billion deficit was upwardly revised by twice that amount to £6.2 billion. Investors were not impressed and the GBP is 0.3% lower on the day.

Some of that loss was driven by the Bank of England's policy announcement on Thursday. Whilst there were no actual surprises in the statement and Bank Rate remained at 0.75%, there was a degree of disappointment that none of the Monetary Policy Committee's members had voted for a rate increase. The bank tried bravely to talk up the possibility of higher interest rates, saying the next move "could be in either direction". However, with the economy forecast to stagnate in Q2 investors are not holding their breath for a rate hike.

JPY

At a domestic level the JPY was at a loose end on Thursday and overnight, rising and falling for a net gain of 0.3% against the USD. Its path was mainly a function of changing risk-appetite among investors, not least in relation to the attack on Iran that never happened.

The Japanese data were neither interesting nor impactful. Headline inflation was a touch lower in May and in line with forecast at 0.7%. The manufacturing PMI missed on both counts at a provisional 49.5.

USD: On-off Iran attack confuses markets

USD: On-off Iran attack confuses markets

EUR: Germany wins and loses PMI battle

EUR: Germany wins and loses PMI battle

CAD: Tracking oil, losing jobs

CAD: Tracking oil, losing jobs

GBP: BoE lowers growth forecast

GBP: BoE lowers growth forecast

JPY: Reacting to risk sentiment

JPY: Reacting to risk sentiment

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