Good morning
Equity markets had something of a positive day yesterday, well they did until Apple announced a slow-down in hiring which sent Apple shares and other tech stocks lower. The optimism that had started the week waned, gains turned to losses and we saw some US dollar buying which helped the likes of GBPUSD and EURUSD to fall from the highs they posted around 1.2030 and 1.0200 respectively.
Both traded lower over night with GBPUSD touching 1.1925 and EURUSD 1.0120 but as I type we have seen some USD selling, taking GBPUSD back up to 1.2000 and EURUSD all the way to 1.0220, the latter helped by some talk that ECB will raise rates by more than expected on Thursday . This sharp move higher in the Euro has sent EURGBP to 0.8520 (GBPEUR 1.1735), the lowest level for GBP against EUR for nearly two weeks.
Obviously the focus was on the weather yesterday, it really was remarkably hot although dare I say it wasn’t perhaps quite as hot as I feared, possibly because I’m not sure the peak was quite what they had forecast. It was supposed to be hotter today but a quick peek at the forecast suggests a high here of just 37 degrees, yesterday they were suggesting it would reach 41. Still very hot mind you! In London much of the tube network was severely disrupted but perhaps the most worrying news came from Luton airport, where a piece of the runway had to be replaced after melting.
UK unemployment numbers were out this morning and painted a slightly mixed picture with employment growing but perhaps at a slowing rate. Although wage growth ticked higher to 4.3% as expected, it is no surprise that after adjusting for inflation growth is falling. It will be interesting to see if BoEs Bailey comments on employment when he talks alter this evening. Of course a clue on the size of the next rate rise will be useful. Early tomorrow morning we will have the UKs latest inflation numbers, the core reading is expected 5.8%, a tiny decrease from last month but still at very high levels.
RBA minutes were on the hawkish side, making it clear monetary policy would be normalised in the coming months, and Bullock added that the neutral rate was quite a lot higher that current levels. Much of the decision on size of rate rises will be data-dependent, specifically inflation and employment. AUD has been given a bit of support, AUDUSD now 0.6875, AUDNZD 1.1075, while GBPAUD is down at 1.7450.
That’s all for now, enjoy the day and enjoy the sunshine, but don’t get too hot. Temperatures settle to a more realistic 27 degrees tomorrow, with even a chance of rain. Typical UK summer……
- 10.00 ECB bank lending survey
- 10.00 EU HICP
- 13.30 US building permits, housing starts
- 18.45 BoEs Bailey speaks
- 00.10 RBAs Lowe speaks
- 02.30 PBoC rate announcement
- 07.00 UK CPI, RPI, PPI
Comments