Morning Report: 25 June 2018

June 25, 2018

GBP.  Sterling made minor gains on Friday but ultimately lost out to the dollar over the whole week. There is little top-tier data released this week, with April’s index of services due Friday morning along with the final reading of GDP for Q1. The Bank of England’s Financial Stability Report is scheduled to be released on Wednesday, off the back of a hawkish hold by the Bank of England last week. On Thursday, BoE Chief Economist, Andy Haldane will give a talk in London about poor productivity growth in the UK, with Haldane previously increasing speculation over an August rate hike with his change in stance in last week’s vote to a rate hike. Also on Thursday, the EU’s 2-day summit begins in Brussels, with leaders discussing migration – a much-needed topic of discussion to hold up Angela Merkel’s coalition – and Brexit.

EUR. The euro rallied almost half a percentage point on Friday, leaving the single currency up against the dollar for the week. This week, the data calendar for the Eurozone is focused on inflation, with Germany due to post preliminary Consumer Price Index data for June on Thursday, with France and the Eurozone-wide estimate to follow on Friday. The EU summit on the 28-29th will be focused on by market participants; topics such as migration will be in the limelight. Angela Merkel’s CDU/CSU coalition is on the brink of collapse over the movement of migrants across the EU into German territory once they have already sought asylum in a neighbouring country. Discussions on a viable solution will be discussed over this 2-day period.

USD. The dollar experienced a volatile week this week, with the dollar composite DXY index reaching 11-month highs on Thursday, but ultimately ended the week nearly 0.4% down from Monday’s open. This week’s data calendar is fairly busy for the greenback, with the Conference Board’s measure of Consumer Confidence released tomorrow, core durable goods data for May is released Wednesday along with crude oil inventories, final GDP for Q1 is due Thursday, and Personal Consumption Expenditure – the Federal Reserve’s main inflation measure- is released on Friday with a slight uptick to 2.2% for May expected.

CAD. The loonie experienced quite a turbulent day Friday, with CPI inflation and Retails sales falling short of expectations and oil production increased by OPEC, the loonie managed to end the session in the green against the greenback. This week, Bank of Canada’s Governor Stephen Poloz is expected to speak on the transparency of Central Banks on Wednesday, GDP data is released on Friday for April, and the Bank of Canada’s Business Outlook Survey is released in the afternoon. With the loonie trading near 11-month lows posted last week, a much needed positive data week is needed for the loonie to rebound.

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