Trade War Fears, Politics Drive Markets

Trade war fears, politics, and the ECB Forum on Central Banking take the focus in today's market analysis.

Previous Day's Market Highlights

The dollar remained relatively strong against both the pound and the euro yesterday. Sterling-dollar continued to hold below 1.33 and euro-dollar traded to either side of 1.16. Sterling-euro briefly dipped below 1.14 for the first time since Thursday. The economic calendar was light.
 
The Aussie softened after the release of the RBA meeting minutes, which saw the removal of the statement that the next rate move would be a hike. House Price Index figures declined, but by less than forecast.
 
Global trade war concerns remained in focus, weighing on market sentiment and thus equity markets. Asian markets fell overnight, and the yen gained as a safe haven. The Shanghai Composite hit a nearly two-year low after falling over 3%. European stocks have also come under selling pressure.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1405 1.1498 1.1302 1.70%
GBP/USD 1.3211 1.3492 1.3204 2.13%
EUR/USD 1.1583 1.1853 1.1510 2.89%
GBP/AUD 1.7939 1.7970 1.7395 3.20%
GBP/NZD 1.9170 1.9455 1.8905 2.83%
GBP/CAD 1.7496 1.7550 1.7055 2.82%

Today's Market Highlights

Central bank speakers remain in focus. ECB President Draghi is giving the introductory speech at the ECB Forum on Central Banking this morning (from 09:00 BST). There could be some price risk for the euro from today’s forum as markets seek additional guidance, but a lack of surprises may see a limited currency impact overall. Board member Peter Praet chairs the day’s session on “Macroeconomics of price and wage-setting”. Fed member Bullard is scheduled to participate in the afternoon panel.
 
US Building Permits and Housing Starts will occupy market attention on the data front, with mixed figures projected. Politics will also remain a key player, particularly any US trade and Brexit bill headlines, which may pose downside risks to the dollar and the pound, respectively.

Today's Economic Calendar

Time Currency Release Consensus Previous
09:00am EUR ECB President Draghi Speaks
09:30am EUR ECB's Praet Speaks
12:00pm USD Fed Member Bullard Speaks
12:00pm EUR ECB's Praet Speaks
01:30pm USD Housing Starts MoM (May) 1.312M 1.287M
01:30pm USD Building Permits MoM (May) 1.350M 1.352M
NZD Global Dairy Trade Price Index -1.3%
11:45pm NZD Current Account QoQ (Q1) $0.05B $-2.77B

Caxton