2nd July 2019 Market Update
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🇬🇧 GBP – Data yesterday showed that UK manufacturing activity fell to a six year low in June, highlighting the impact of Brexit woes and economic slowdown. The pound dropped lower as a result and remains generally pressured.
In Brexit news, UK PM Candidate Jeremy Hunt announced £20B no-deal Brexit ‘war chest’ which would financially support industries in the UK hit by a no-deal Brexit. In addition, Hunt said he will also call to cut corporate taxes to 12.5% regardless of Brexit deal and whilst the key is to negotiate a better Brexit deal, the government must be prepared to walk away from bad Brexit deal.
Today, we have a quiet day ahead with only construction activity data due this morning, which is expected to show a slight improvement.
🇪🇺 EUR – Manufacturing data in the Eurozone also missed expectations and pushed the euro lower, this was the fifth consecutive month of contraction for the eurozone. However, a surprise positive was the unemployment rate for May which improved slightly to 7.5%. The euro was further pressured after the US trade representative office recommended tariffs worth more than $4B on Europe, targeting olives, whiskey and Italian cheese, this is in addition to the $21 B tariffs announced in April and we are likely to see a European Response with US tariffs soon.
German retail sales this morning showed a decline in the month on month figure and later this morning Producer prices will be in focus as this too is expected to falter, potentially pressuring the euro.
🇺🇸 USD – In a contrast to the eurozone and UK manufacturing activity, the US actually posted a decent figure and beat expectations yesterday, further boosting the already strong dollar.
Today, we have two interesting Fed speakers: Williams and Mester and markets will be looking to hear their take on the trade standoff between the US and China and any forward guidance on the July rate decision.
GBP: Manufacturing activity slumps; Sterling falters
EUR: US tariffs hurt the Euro
USD: Fed Speakers today will be in the limelight ahead of the Fed Rate meeting
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