The Pound suffered from further domestic political uncertainty yesterday and failed to muster support from global market trends. There were no clear signs of increased Withdrawal Act support for the next vote in June. The 1922 committee executive meeting with the Prime Minister was followed by the announcement that the PM’s resignation timetable would be revealed after the Brexit vote. Boris immediately announced he would be running before adding that there was no vacancy at present.
A leadership contest this Summer appears inevitable regardless of the Brexit vote outcome and another rejection would likely trigger immediate resignation. There was also a firm expectation that cross-party talks with the Labour Party would conclude today without a breakthrough. The instability of government and a lack of progress triggered a drop below 1.2800 on the Dollar and Euro mustered limited gains despite its own woes. Equity market gains and higher oil prices failed to rouse the Pound. With no UK data today there will be no distraction from the political fallout.
The greenback maintained a positive tone yesterday, buoyed by robust domestic data and ignoring escalating trade tensions.
Unemployment weekly claims saw a decrease of 16k from the previous week. Building permits beat market consensus and the Philly Federal Reserve (Fed) Manufacturing Index was at 16.6 for May, increasing from a reading of 8.5 in April. The survey sees the continued growth of the coming months, ignoring raging trade tensions with China.
US Commerce Secretary Ross indicated that a decision on EU auto export tariffs would be made over the weekend and there was an element of uncertainty whether tariffs would be delayed for up six months.
The US Dollar index is closing on a two week high as the market continues to digest the incoming data. Trade talks between Beijing and Washington are still at centre stage. New non-tariffs measures between the two parties are expected to inject more uncertainty.
Yesterday saw a few concerns over the single currency. US Commerce Secretary Ross indicated that a decision over EU auto tariffs would be taken over the weekend and there was some uncertainty that it may drag out for up to six months. This exerted downward pressure on the Euro as uncertainty grew. Italian Deputy PM Salvini said he was prepared to tear up EU fiscal rules showing a distinct lack of respect, therefore, creating more uncertainty. Finally, Bundesbank President Weidmann stated that domestic inflation was low in what was perceived to be a dovish statement which decreased Euro support.
EU CPI figures first up are expected to provide some volatility, particularly if there are some unexpected results. Aside from this, there is virtually nothing to affect the single currency, however, there is also EU construction output which may cause some movement.
Data to watch:
09:00 EUR Consumer Price Index (MoM) (Apr)
09:00 EUR Consumer Price Index - Core (YoY) (Apr)
09:00 EUR Consumer Price Index (YoY) (Apr)
09:00 EUR Consumer Price Index - Core (MoM) (Apr)
14:00 USD Michigan Consumer Sentiment Index (May)
17:40 USD Fed’s Clarida speech
18:00 USD Fed’s Williams speech
Posted in Daily Market News on May 17 2019
About the author //
With more than 17 years experience in financial services, Head of Sales Rob guides PLCs and sole traders alike through the complex maze that is the foreign exchange market, helping them to save money and mitigate risk.
He has a wealth of experience and knowledge from holding numerous roles including various positions in investment banking and services in Front, Middle and Back offices. This gives him giving a particularly insightful view on customers’ problems and requirements. Rob also helps to keep our clients informed of the latest in the currency world with our daily market commentary.
GBPWith no tier one data releases from the UK yesterday the markets focused domestic politics and trading patterns elsewhere. An overwhelming lack of confidence Theresa May’s ability to push the Brexit Withdrawal Bill through in early June and the subsequent drop in confidence in her leadership increased pressure for a...VIEW FULL ARTICLE
Posted in Daily Market News on May 16 2019 by Rob