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Parliament to Drive the GBP, with Economic Data to Influence the EUR and USD

Bob Mason
The Greenback is on the move early, while the EUR and GBP are under pressure. Today’s stats and chatter from the administration will drive the majors.

Earlier in the Day:

The economic calendar was on the quieter side for a 2nd consecutive day, with no material stats due out during the Asian session this morning.

A lack of stats left the majors in the hands of market risk appetite through the day.

While hopes of a summer trade deal can be positive for the Nikkei, it’s not just a U.S – Japan trade agreement that is needed to support the majors.

Trump spoke from Japan on Monday stating that the U.S was not yet ready to finalize a trade agreement with China. An extended period of tariffs and continued economic uncertainty will test risk sentiment should economic indicators continue to disappoint.

For the Majors,

At the time of writing, the Japanese Yen was up by 0.03% to ¥109.48 against the U.S Dollar. The Kiwi Dollar was up by 0.08% to $0.6550, with the Aussie Dollar was up 0.13% to $0.6927.

In the equity markets,

The majors were on the move through the morning. The Nikkei was up 0.48%, whilst the CSI300 continued to lead the way this week, up by 1.02% at the time of writing. The Hang Seng and ASX200 were up by 0.51% and by 0.48% respectively.

Continued hopes of a U.S – Japan trade agreement provided support early on.

Barring another escalation in the U.S – China trade war, rhetoric, and economic data will likely be negative for the majors near-term. The markets have largely priced in the current state of play in the U.S – China trade war.

The Day Ahead:

For the EUR

It’s a busier day ahead on the economic calendar. Germany’s June GfK consumer climate figures are due out in the early part of the day.

We can expect the EUR to be sensitive to any disappointing numbers.

Later in the European session, the Eurozone’s May consumer and business confidence figures are also due out. We can expect the stats to provide further direction to the EUR.

The economic data is forecasted to weigh on the EUR. U.S consumer confidence numbers out of the U.S will need to impress, however, to pin the EUR back against the Greenback.

Outside of the numbers, trade war chatter will continue to be of influence, though the markets will need to temper expectations of a near-term U.S – China trade agreement.

At the time of writing, the EUR was down 0.10% to $1.1183.

For the Pound

It’s another quiet day on the economic data front, with no material stats due out of the UK today. Mortgage approvals are due out in the early part of the day. The markets will likely brush aside the numbers, as the focus shifts towards Parliament.

The UK was on holiday on Monday, so we can expect the EU parliamentary election result backlash to begin in earnest.

While the EU may have survived an anti-Establishment onslaught, the British government has faced the wrath of voters ahead of the summer recess.

The race for the Tory Party leadership is heating up, with Theresa May leaving in just over a month. We can expect Brexit deal – no deal chatter to become a greater distraction for the Pound.

Greater economic uncertainty will likely also contribute to a softer Pound.

At the time of writing, the Pound was down 0.03% to $1.2675.

Across the Pond

April house price figures and May consumer confidence figures are due out of the U.S this afternoon.

The focus this afternoon will be on the consumer confidence numbers. Forecasts are Dollar positive. A string of disappointing economic indicators has shown U.S economies frailties, however. It remains to be seen whether labor market conditions are enough to support confidence.

The U.S equity markets are sitting in the red for the month, which never helps…

At the time of writing, the Dollar Spot Index was up 0.19% to 97.798.

For the Loonie

There are no material stats to influence on the day.

The markets will likely look ahead to tomorrow’s Bank of Canada monetary policy decision. There’s unlikely to be too much hawkish chatter.

The Loonie was up 0.03% at C$1.3440, against the U.S Dollar, at the time of writing.

This article was originally posted on FX Empire

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