11th July 2018 Market Update
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?? GBP – The UK released its first monthly estimate of GDP yesterday morning, with a positive reading of a 0.3% rise, making it the fourth monthly increase. However, there was also a barrage of softer figures out at the same time, with industrial production, manufacturing production and goods trade balance all missing the mark. The pound saw some movement as a result, but managing to stabilise, with the market realising that perhaps the movement against the pound was a tad overdone on Monday as political instability concerns have eased somewhat, though any further fallout within the UK government could see the pound fall again.
Very little is due today, though the NIESR will release their GDP estimate with an expected figure up from 0.2% to 0.3%. Bank of England Governor Mark Carney is speaking later in the day at a conference on the Global Financial Crisis hosted in Massachusetts by the United States’ National Bureau of Economic Research. Any forward guidance on interest hikes will be watched closely, but not expected.
?? EUR – German ZEW economic sentiment and current conditions survey fell very short of expectations, marking the lowest readings since August 2012. German political uncertainty and the fear of further escalations of the trade war with President Trump were cited as the main drivers of the dampening of the economic outlook for the country. The news saw the euro pressured this morning.
Today we have the ECB non-monetary policy meeting and speeches by ECB members including President Mario Draghi, Peter Praet and Yves Mersch all at the ECB Statistics conference in Frankfurt.
?? USD – Not much in terms of data from the US, but we did have a positive reading on the JOLTS job openings figure. The trade wars continue as Washington announced a plan to hit China with tariffs on $200 billion of imports, escalating tensions between the world’s two biggest economies.
Today, we have PPI figures and Fed member Bostic and Williams speaking, though the market will likely be focusing more on how China reacts to the new tariffs.
Elsewhere, the Bank of Canada is expected from 1.25% to 1.5% this afternoon as the monetary policy report is released. This could see the loonie strengthen.
15:00pm: BOC Monetary Policy Report, BOC Rate Statement, Overnight Rate
16:15pm: BOC Press Conference
15:30pm: Crude Oil Inventories
16:35pm: BOE Gov Carney Speaks
Summary: Political uncertainty in the UK seems to have eased off for now, but any further dissention in the ranks could see the pound fall again, though growth figures yesterday have supported the currency. German economic sentiment fell to 6-year lows yesterday on concerns of the trade wars and political uncertainty in the country, though the US doesn’t seem to be easing off the trade wars as Washington announced a new $200 billion tariff against China overnight.
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