Euro Rallies on Migration Deal

The euro rallied overnight after the EU Summit reached a migration deal. UK GDP, Euro CPI, US PCE, and the Summit are in focus today.

Previous Day's Market Highlights

The euro jumped overnight as the EU Summit reached a deal on migration. Division over the migration crisis poses a threat to the unity of the EU and thus to the euro. This pushed sterling-euro further below 1.13 to its lowest levels since mid-March. Euro-dollar jumped around 0.7%, regaining 1.16. After hitting new lows since November, sterling-dollar reclaimed 1.31, gaining in part because of overnight euro-driven dollar weakness.
 
Yesterday, the final estimate of Q1 GDP in the US saw a downwards revision to 2%; the dollar impact was limited. Preliminary German HCIP figures were largely as expected, while Eurozone Economic Sentiment Indicator and Business Climate figures were mixed.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1267 1.1471 1.1247 1.95%
GBP/USD 1.3107 1.3473 1.3049 3.15%
EUR/USD 1.1633 1.1853 1.1510 2.89%
GBP/AUD 1.7738 1.7981 1.7395 3.26%
GBP/NZD 1.9366 1.9415 1.8905 2.63%
GBP/CAD 1.7336 1.7791 1.7168 3.50%

Today's Market Highlights

The EU Summit continues today. In addition to keeping an eye on the latest migration and Brexit headlines, markets will also watch the day’s data. The final estimate of Q1 GDP in the UK is expected to find growth was unrevised at 0.1% quarter-on-quarter and 1.2% year-on-year (09:30 BST). A lack of revision could see a limited sterling impact. Brexit headlines remain a downside risk.
 
Preliminary Eurozone inflation figures (10:00) are forecast to be mixed, with headline CPI rising to 2% but core CPI falling back to 1.0% from 1.1%; signs that core inflation remains subdued could weigh on the euro.
 
In the afternoon, Canada releases monthly GDP, a slowdown in which could weaken the loonie, and the US releases Personal Consumption Expenditures, Income, and Spending data (13:30). A rise in PCE inflation could strengthen the dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:30am GBP GDP QoQ (Q1) 0.1% 0.1%
9:30am GBP GDP YoY (Q1) 1.2% 1.2%
9:30am GBP Total Business Investment YoY (Q1) 2% 2%
9:30am GBP Current Account (Q1) £-18.00B £-18.44B
10:00am EUR CPI YoY (Jun) 2.0% 1.9%
10:00am EUR Core CPI YoY (Jun) 1.0% 1.1%
1:30pm USD Personal Consumption Expenditures - Price Index YoY (May) 2.2% 2.0%
1:30pm USD Core PCE - Price Index YoY (May) 1.9% 1.8%
1:30pm USD Personal Spending (May) 0.4% 0.6%
1:30pm USD Personal Income (May) 0.4% 0.3%
1:30pm CAD GDP MoM (Apr) 0.0% 0.3%
2:45pm USD Chicago Purchasing Managers' Index (Jun) 60.0 62.7
3:00pm USD Michigan Consumer Sentiment Index (Jun) 99.2 99.3
3:30pm CAD BoC Business Outlook Survey

Caxton