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  • richard evans

US dollar makes ground despite weaker US retail sales

Good morning

US Dollar pushed higher Friday after the US retail sales number, a move that I was struggling to decipher given the actual release came in a lot weaker than had been expected and I’d have thought this would have helped push USD lower. Better than expected Michigan sentiment out later did help the USD move higher as well.

GBPUSD moved from around 1.2520 to trade as low as 1.2385 overnight while EURUSD slipped from 1.1070 to 1.0965 overnight, those now 1.2420 and 1.0995 respectively. GBP has certainly lost the most ground, recently, with GBPEUR now down at 1.1300 having started last week around the 1.1400 area. Some talk from ECB insiders that they may look to reduce ECB balance sheet to help bring down inflation has offered support to the single currency.

Some difference of opinions started to emerge from ECB members though, with Nagel and Rehn saying ECB has much more work to do on inflation if it is to get anywhere near targets, while Villeroy and Centeno are talking of a possible pause in rate rises in May, certainly no rise larger than 25bps. Many still look for three more 25bps rises to take rates to 3.75% by year end.

Financial Times is reporting that BoE may look to increase the guarantee level for deposits. Currently set at £85,000, not sure what that could go up to, I seem to recall the US has a $200k or $250k guarantee no I’d imagine BoE would need to look at something nearer that area.

I survived the gold weekend, as usual I had one decent round out of the three which meant I wasn’t on the leaderboard but nor did I take home the wooden spoon. Fitness and consistency my two main issues, I wouldn’t have lasted had I not taken a buggy. I’m still amazed at how one round you can hit the ball so well and by the next round you’re lucky to find a fairway. However, most importantly I’m pleased to report the new shoulder held up well, particularly pleased about that as the surgeon had previously sounded a bit sceptical as to whether I’d manage it.

No major data out today and nothing on the calendar for this morning, some central bank speakers later this afternoon but otherwise I do wonder whether we are in for a quiet session. Kids are back to school today and tomorrow so for those commuting expect busier trains and roads.

- 14.00 BoEs Cunliffe speaks

- 14.30 ECBs Nagel speaks

- 18.00 ECBs Lagarde speaks

- 02.30 RBA minutes

- 03.00 China GDP, industrial production, retail sales

- 07.00 UK unemployment

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