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Fed ready to cut

USD

As August approaches and Europe prepares for long vacations, there is a sense that the traders who get currencies moving are losing interest in their task. Tuesday was another quiet one and the USD is on average flat against the other big currencies. The unexciting US data did nothing to encourage investors. Personal incomes narrowly outpaced expenditures in June and consumer confidence rebounded by 11 points in July to 135.7. The numbers are unlikely to divert the Federal Open Market Committee from the 25-basis-point interest rate cut, which almost everyone expects it to deliver today.

While the Chinese and US trade negotiators were preparing for new discussions in Shanghai, the presidential thumbs were flying. In an apparent - and eventually successful - effort to frustrate the talks, Trump claimed that "China is doing very badly" and cannot be trusted.

EUR

Like the USD, the EUR took no active part in the proceedings. At 0600 EST yesterday, it was $1.1147 and at the same time this morning it was worth $1.1143. To all intents and purposes, it is net unchanged on the day.

Some of this morning's Euroland data helped; most did not. A 3.5% monthly rise in German retail sales in June still left them 1.6% below the level of the same month last year. French inflation slowed to 1.3% and Italian inflation to 0.4%. In Euroland, as a whole, price inflation was down from 1.3% to 1.1%. There was disappointment too from the GDP data. The euro zone economy expanded by a provisional 0.2% (annualized 0.8%) in the second quarter, half the pace of Q1.

CAD

For the seventh day in succession, there were no Canadian economic statistics. Oil prices moved higher again, with WTI crude up by 1.8%.

It was not much of a reason to buy the CAD, but at least that was the tilt. The Loonie is 0.2% higher on the day against the USD.

GBP

After its thrashing on Monday, the pound was let off the hook yesterday. It was among the top performers and is just 0.1% lower against the USD. Data early this morning covered consumer confidence and house prices. GfK reported a two-point improvement in confidence, to -11. Nationwide said prices were up by 0.3% on both the month and the year. 

On the Brexit stage, the Prime Minister prepared the way for a bit of buck-passing if it all goes awry. He said it would be the fault of the EU if Britain were to leave Europe with no deal. 

JPY

Another currency that did not move - at all - was the JPY. It was precisely unchanged at ¥108.57.  

This morning's Japanese data were low-profile statistics. Housing starts rose by an annual 0.3%, while construction orders were down by 4.2%. Consumer confidence weakened slightly from 38.7 to 37.8.

USD: Quarter-point rate cut expected

USD: Quarter-point rate cut expected

EUR: Mostly disappointing data

EUR: Mostly disappointing data

CAD: Still asleep

CAD: Still asleep

GBP: Blaming the EU

GBP: Blaming the EU

JPY: Precisely unchanged

JPY: Precisely unchanged

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