UK Data, Fed Chair Powell in Focus

UK labour market data and Fed Chair Powell's semi-annual testimony will drive markets today.

Previous Day's Market Highlights

While US Retail Sales were in line with expectations, May figures were revised higher; however, the overall dollar impact was relatively limited. Sterling-euro continued to trade near 1.13, while sterling-dollar tested 1.33 but failed to break the key level. Euro-dollar again regained 1.17.
 
The kiwi rallied overnight, despite a miss in the QoQ and YoY CPI figures, after the RBNZ released its measure of core inflation, which hit a seven-year high. The Aussie was a touch softer around the release of the RBA meeting minutes, which contained little new information.
 
Trump and Putin held a summit yesterday in which they were upbeat over the future of US-Russia relations. Overall the meeting came under criticism from many in the US, including several prominent Republicans. John McCain called it “one of the most disgraceful performances by an American president in memory”. The overall currency impact was limited, but investors will continue to eye US-Russia relations and any implications for US domestic politics.

Currency Pairing 08:00 Today Vs 08:00 Yesterday Four-Week High Four-Week Low % Change
GBP/EUR 1.1298 1.1461 1.1234 1.98%
GBP/USD 1.3257 1.3363 1.3049 2.35%
EUR/USD 1.1734 1.1791 1.1510 2.38%
GBP/AUD 1.7841 1.7981 1.7472 2.83%
GBP/NZD 1.9421 1.9622 1.8932 3.52%
GBP/CAD 1.7390 1.7791 1.7168 3.50%

Today's Market Highlights

Today kicks off a set of key UK data with the release of May’s labour market data (09:30 BST). Softer Average Earnings excluding Bonuses could weigh on the pound, but an overall positive report could strengthen the pound as investors look for signals that an August rate hike is still on the cards. Testimony from BoE Governor Carney and MPC Member Cunliffe on the latest Financial Stability Report (from 09:00) is also in focus this morning, while any Brexit headlines remain a downside risk.
 
In the afternoon, the dollar could garner some support from gains in both Industrial Production and Capacity Utilization (14:15). Investors will parse Fed Chair Powell’s semi-annual testimony before congress for any additional insight into his views on monetary policy; a lack of any new information could see a limited dollar impact, while a cautious tone could weaken the dollar.

Today's Economic Calendar

Time Currency Release Consensus Previous
9:00am GBP BoE Governor Carney Speaks
9:30am GBP Average Earnings incl Bonus 3M/Yr (May) 2.5% 2.5%
9:30am GBP Average Earnings excl Bonus 3M/Yr (May) 2.7% 2.8%
9:30am GBP ILO Unemployment Rate 3M (May) 4.2% 4.2%
9:30am GBP Claimant Count Change (Jun) 2.3K -7.7K
2:15pm USD Industrial Production MoM (Jun) 0.5% -0.1%
2:15pm USD Capacity Utilization (Jun) 78.3% 77.9%
3:00pm USD Fed Chair Powell Speaks
NZD Global Dairy Trade Price Index -5%

Caxton