Pound Sterling posts fresh monthly highs on retail sales data
Key Notes:
- New Zealand GDP q/q 0.2% vs. 0.6%; y/y 2.6% vs. 3.1%
- Switzerland trade balance 3.43bn vs. 2.86bn; Exports real m/m 5.4%; Imports real m/m -3%
- SNB leaves Libor rate unchanged at -0.75%
- UK retail sales m/m 0.2% vs. -0.1%; y/y 4.6% vs. 4.6%
- UK core retail sales m/m 0.2% vs. -0.2%; yy 4.4% vs. 4.3%
- US CPI m/m 0.4% vs. 0.5%; Core CPI m/m 0.1% vs. 0.2%
- US CPI y/y 0.0% vs. 0.2%; Core CPI y/y1.7% vs. 1.8%
- US jobless claims 267k vs. 277k
Later:
- Eurogroup meetings
- Philly Fed manufacturing index
- Leading indicators
The currency markets opened today with the weakening US Dollar off yesterday’s FOMC statement. In the Asian trading session, the Kiwi Dollar declined to fresh lows, testing 0.689 as New Zealand GDP missed estimates, rising 0.2% on the quarter and 2.6% annualized. The Kiwi remained under pressure as continued weaker economic data continues to raise speculation of further RBNZ rate cuts in future meetings.
The Australian dollar, which declined to 0.7662 prior to the FOMC, managed to stage a strong rally which continued into today’s session. AUDUSD rallied to post weekly highs near 0.783, above the 0.782 resistance level. This leaves room for a test to 0.805 level of resistance in the medium term.
The Japanese Yen was little changed but was trading stronger across the board ahead of tomorrow’s BoJ monetary policy meeting.
The European trading session saw the Swiss National Bank leave its LIBOR rate unchanged at -0.75%. SNB Governor, Thomas Jordan reiterated on the exchange rate of the Swiss Franc, calling it overvalued. However the Swiss Franc was little changed on the comments maintaining a strong theme throughout.
UK retail sales data released today showed a 0.2% growth in sales and 4.6% y/y in the month of May. The general consensus was expecting to see a flat print after last month’s subdued sales. The GBPUSD rallied to post a fresh 7-month high, trading near 1.5916 on the news. Various comments from BoE officials have also turned hawkish with MPC member, Kristin Forbes noting that interest rates would have start rising in the not too distant future.
There were no major releases from Europe and Greece remains on traders’ minds. Eurogroup leaders are meeting Luxembourg today to discuss the Greece crisis. Failure to reach any significant achievement today will call for an emergency weekend meeting. Greece has refused to budge and give in to creditor’s demands for cutting pensions. German Chancellor, Angela Merkel was still hopeful for a deal and said that Germany would focus on keeping Greece in the Eurozone. The EURUSD remains vulnerable to Greece news where it is becoming more likely that we might get to hear some breakthrough over the weekend.
The US trading sesion saw the release of the CPI and jobless claims. Consumer inflation rose 0.4% for the month, and remained flat on the year. Core CPI also failed to meet estimates, rising 0.1% and eased to 1.7% on the year. The weekly jobless claims managed to rise 267k against estimates of 277k. The US Dollar Index remained pressured to the downside as the currency index was seen trading near 93.85. Other economic data from the US includes the Philly Fed manufacturing index and the US leading indicators.
