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"Euro zone economic growth falters"

USD

It was not a great day for US economic data. All but one of the numbers came in below forecast. The Redbook index made the cut, with retail sales 1.1% higher on the month and up by 4.9% from the same week last year.  The FHFA housing price index was there or thereabouts, 5.0% higher than a year ago but only rising 0.1% in May. Existing home sales were a disappointing 1.7% fewer in June.

The biggest challenge was the Richmond Fed's Survey of Manufacturing Activity. At -12 it was 15 points lower on the month and the lowest in more than six years.

EUR

Yesterday's EC consumer confidence indicator was a little better than expected at -6.6. This morning's provisional purchasing manager' index readings mostly were not. Markit's summary was "Eurozone economic growth falters as manufacturing downturn deepens. Only one of the measures, German services, beat forecast at 55.4 and even that was half a point lower on the month. German manufacturing was a horror story at 43.1, an 84-month low. The EUR reacted negatively to the numbers. It was already on the retreat and is 0.4% lower on the day against the USD.

There was some - but not much - concern about politics in Spain. Three months on from April's general election prime minister Pedro Sanchez has yet to form a coalition government. It could - but likely will not - mean another general election.

CAD

There was little or no correlation between oil prices and the Loonie on Tuesday. WTI crude is 1.1% higher on the day while the CAD is down by 0.1% against the USD.

There were no Canadian economic data on Tuesday's list and there are neither are there any before the end of the week.

GBP

The selection of Boris Johnson to replace Theresa May as prime minister has done no harm to sterling. There was no surprise at the result and the pound opened in London this morning mostly above its levels prior to yesterday's announcement. It is 0.3% higher against the USD.

Earlier yesterday the GBP had been under some pressure as a result of CBI's Industrial Trends Survey. At -34 it was 19 points below forecast and 19 points lower than expected. "Optimism fell at the fastest pace since July 2016 – just after the referendum – and investment spending plans weakened again." The pound received at  least theoretical help from Bank of England chief economist Andy Haldane. In his speech he warned against assuming that interest rates will go down: "I would be very cautious about considering a monetary policy loosening, barring some sharp economic downturn".  

JPY

The yen went nowhere. It is an unnoticeable 0.1% lower on the day against the USD.

All three of Japan's provisional PMIs were a touch higher in July, though not necessarily ahead of forecast. The manufacturing measure came in at 49.6, not quite in the growth zone but not a mile away. The leading and coincident economic indices once again diverged, with the coincident indicator firming from 102.1 to 103.4 and the leading indicator down by a point at 94.9.

USD: Slower growth in Richmond

USD: Slower growth in Richmond

EUR: All but one PMI fall flat

EUR: All but one PMI fall flat

CAD: Nothing to say

CAD: Nothing to say

GBP: New prime minister starts work

GBP: New prime minister starts work

JPY: PMIs improve in July

JPY: PMIs improve in July

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