Dollar Gains on Rising Trade Tensions

The USD gained on risk aversion as trade tensions increased. The BoC hiked interest rates. ECB minutes & Brexit White Paper are key today.

Previous Day's Market Highlights

The US dollar gained yesterday as trade tensions between the US and China continued to escalate, which weighed on risk sentiment, and the Producer Price Index surprised to the upside. This saw euro-dollar fall back below 1.17 and sterling-dollar fall back towards 1.32.
The Canadian dollar rallied as the Bank of Canada hiked interest rates by 25 basis points to 1.50%, as had been widely anticipated, and struck a less dovish tone than some investors had expected. The BoC raised growth forecasts but indicated greater concern over global trade. The OIS market indicated around a 70% chance of an additional rate hike this year. The loonie gained around 0.5% against the pound, pushing back below 1.74.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1313 1.1471 1.1234 2.07%
GBP/USD 1.3218 1.3448 1.3049 2.97%
EUR/USD 1.1685 1.1853 1.1510 2.89%
GBP/AUD 1.7891 1.7981 1.7472 2.83%
GBP/NZD 1.9530 1.9622 1.8925 3.55%
GBP/CAD 1.7441 1.7791 1.7168 3.50%

Today's Market Highlights

Today’s ECB Meeting Accounts (12:30 BST) will be of interest following the June announcement that the ECB will wind down asset purchases by the end of the year and that interest rates will remain on hold until at least summer 2019. Investors will pay close attention to the nuance of the discussions for any further clues as to the leaning of both individual members and the governing council as a whole. Any signals that a hike could come sooner rather than later within the guided period could strengthen the euro.
The dollar could see some support with CPI forecast to have risen in June and weekly Initial Jobless Claims to have ticked lower (13:30). Fed speakers include Minneapolis Fed President Kashkari, a dove, and Philadelphia Fed President Harker, neither of whom are voting FOMC members this year. Philadelphia and Minneapolis Fed presidents will be alternate members next year and voting members in 2020.
While the data calendar is light on the UK front, markets will keep an eye on Prime Minister May’s Brexit White Paper and any Brexit headlines.

Today's Economic Calendar

Time Currency Release Consensus Previous
10:00am EUR Industrial Production s.a. MoM (May) 1.2% -0.9%
12:30pm EUR ECB Monetary Policy Meeting Accounts
1:30pm USD Fed Member Kashkari Speaks
1:30pm USD Initial Jobless Claims (2 Jul) 225K 231K
1:30pm USD Consumer Price Index YoY (Jun) 2.9% 2.8%
1:30pm USD Core CPI YoY (Jun) 2.3% 2.2%
5:15pm USD Fed Member Harker Speaks
7:00pm USD Monthly Budget Statement $-98.2B $-147.0B
11:30pm NZD Business NZ PMI (Jun) 54.5
1:00am USD Fed Member Kashkari Speaks