Stocks Slip as Market Awaits Fed Direction
9th July 2019 Market Update
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?? GBP - Sterling continued its grind lower yesterday despite a lack of data. The market perceives sterling as a “riskier” currency. The favourite to be the next prime minister, Boris Johnson, maintains his tough talk over Brexit. This grind may continue for the next couple of months, with the political situation unlikely to significantly change before the 31st October EU deadline. Like yesterday, there is no data of note being released from the UK today. Tomorrow GDP and manufacturing production figures are being released. These pieces of data could be over analysed by the market, in the build up to the Bank of England’s interest rate decision on 1st August.
?? EUR - Germany’s trade balance exceeded expectations, and industrial production figures came out marginally below market expectations. This morning Italian retail sales are expected to creep up, however this is unlikely to cause any real stir in the FX markets.
?? USD - The dollar continued to maintain its strength yesterday, as the markets look to Powell this week. Expectations for an interest rate cut of 50 basis points have faded, and this was reflected in a drop in the stock market. Fed Chair Powell is due to speak today at a conference given by the Boston Fed. Powell is then due to testify before the House Financial Services Committee tomorrow, and the due to testify before the Senate Banking Committee on Thursday. The market will be looking for any indication as to whether the Fed will still be looking to cut interest rates at the end of the month.
GBP: Sterling slips further in the current political climate
EUR: Euro remains relatively firm despite a lack of data
USD: The market looks to Powell, as he speaks publicly 3 times this week
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