11th July 2017 Market Update
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?? GBP – Another relatively quiet day yesterday with no red flag data. At midnight last night, the British Retail Consortium released like-for-like Retail Sales figures, which measures the change in value of same-store sales at the retail level. The reading was positive, coming in more than double the expected, thus propping the pound up this morning.
PM Theresa May will be giving a speech later today at the launch of the Taylor Review on workers’ rights. She is anticipated to invite Jeremy Corbyn and other political rivals to help clarify and improve the Brexit manifesto, which has led to whispers that she is running out of ideas. Her speech also comes ahead of Tory rebellions expected on the repeal bill to be published tomorrow.
Bloomberg also published a Q&A listicle type article titled “Will Brexit Trigger Exodus of Banks From London?”, which goes along the lines of “if UK firms lose easy access to Europe’s $19 trillion economy, it will become less attractive place to do business. Morgan Stanley, JP Morgan, Chase & Co. having said that they are considering/have already made plans to relocate staff. The tone of the article indicated that despite May’s attempt at securing a bold and ambitious free trade agreement, EU regulators have indicated that they won’t tolerate fly-in fly-out arrangements with bankers commuting from London.
?? EUR – The euro has continued to gain, as Britain’s lack of unity entering Brexit negotiations has swayed confidence away from the pound. Helped along by a swathe of positive German trade figures early yesterday morning.
Today, leaders of big European and global banks, including JP Morgan and Chase & Co meet for the annual forum organised by Paris Europlace to discuss the future of banking in Europe. PM Eduard Philippe, who last week announced three finance-friendly initiatives will give the keynote speech in an attempt to win business from London. HSBC has publicly expressed a preference for Paris.
?? USD – Yesterday the Federal Reserve released monthly consumer credit figures, which came out higher than anticipated. The figure is correlated with consumer spending and confidence, thus the rising debt levels are a sign that lenders feel comfortable issuing loans, and that consumers are confident in their financial position and are eager to spend money.
This afternoon the Bureau of Labor Statistics will release the number of job openings during the reported month, which could give us an indication of overall employment in the US. FOMC Member Brainard due to speak about monetary policy at the Columbia University, so if that comes out more Hawkish than expected we could see some USD movement.
15:00pm – US JOLTS Job Openings.
17:30pm – US FOMC Member Brainard Speech.
Our View: For some time now, we have been very range-bound with regards to the major currency pairings. There is little on the horizon that is going to cause seismic rifts and the likelihood is that we will see ranges fairly static for the time being. As regards the pound, it will take some time yet for any significant recovery, largely dependant on the ongoing Brexit negotiations.
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