Mayor of London, Sadiq Khan has described this morning’s incident at a north London mosque as a ‘’horrific terrorist attack’’ with Theresa May set to chair a meeting of the governments emergency Cobra committee today.
Sterling ended last week mostly higher against G10 currencies after a busy week of macro releases, central bank announcements and political developments.
The pound gained ground on Tuesday as reports suggested the DUP-Conservative deal was coming together while stronger than expected inflation metrics also provided support.
After poor earnings and retail sales figures on Wednesday and Thursday the pound experienced weakness, however it spiked higher on Thursday afternoon after a surprisingly hawkish Bank of England release. The Bank Rate was left on hold at 0.25% but a 5-3 vote surprised economists who had expected another 7-1 showing.
Looking ahead, a quieter week for data in the UK with public sector net borrowing on Wednesday and CBI orders on Friday.
Political developments will be closely watched as Brexit talks begin today while any comments from Bank of England MPC officials will also be of interest after the surprise vote.
French President Emmanuel Macron has obtained a decisive majority in the parliamentary elections, gaining 350 of 577 seats in the National Assembly, according to official results from the interior ministry.
The Euro was up 0.6 per cent against Sterling last night but has lost those gains early this morning.
It was not the busiest week last week for the Euro with investors focus dominated by other major central bank events.
The single currency began the week with a modest bid as weekend polls signalled a sizeable majority for Emmanuel Macron in the legislative elections. The week ended on a positive note after Euro Zone Finance Ministers approved an €8.5 billion aid tranche for Greece and the IMF said they would participate once debt relief measures had been agreed.
Final CPI figures released on Friday provided no surprises and were unrevised from the flash readings.
This week is not the busiest in terms of data for the Euro Zone. Current account figures are out tomorrow, consumer confidence on Wednesday and preliminary PMI data on Friday.
As expected, the US Federal Reserve raised its key interest rate by 0.25%, the second increase this year. The central bank voted to raise its key rate target to a range of 1% to 1.25%. The move follows a record run of jobs growth in the US that has driven the unemployment rate down to its lowest level in 16 years.
It was a choppy week for the US Dollar with the currency falling sharply on Wednesday before rebounding thereafter. Losses followed weaker than expected US retail sales and consumer price inflation figures on Wednesday which pushed the Dollar Index to its lowest level since November 9th.
The rebound occurred later in the day after the FOMC policy decision where Chair Janet Yellen struck a notably more hawkish tone in the press conference. Gains continued on Thursday as Empire manufacturing and Philly Fed surprised to the upside with the Dollar Index touching a 13-session high on Friday.
Looking ahead, FOMC speakers are in focus with Dudley due later today and the trifecta of Evans, Fischer and Kaplan tomorrow.
Data wise, existing home sales are due on Wednesday followed by house prices on Thursday and preliminary PMI figures on Friday.
The Japanese Yen fell against most of the major currencies last week. Safe haven demand was evident on Monday but this dissipated through the week with heavy losses seen on Thursday.
Bank of Japan Governor Kuroda provided further weight on Friday with some dovish remarks. After the BoJ left rates on hold, he said that they are still quite a distance from two percent inflation and it is not appropriate to present a specific plan on how to exit from stimulus.
Following trade figures released overnight, we await the all industries activity index on Wednesday alongside the minutes from the prior BoJ meeting. Manufacturing PMI follows on Friday.
The Swiss Franc softened last week although little attention was paid to the SNB policy announcement on Thursday. Rates were left on hold while the usual rhetoric regarding the Swiss Franc strength was maintained.
Producer price figures also surprised to the downside. Losses were more likely prompted by an aversion to perceived safe haven assets last week with the Japanese Yen and gold prices also lower.
Looking ahead, SNB President Thomas Jordan speaks tomorrow although he is not expected to deviate far from his usual rhetoric on monetary policy. Trade figures are out on Thursday.
The Australian Dollar rallied against most of the G10 currencies last week, supported by better-than-expected data at home and in China.
On Wednesday, we saw Chinese industrial production and retail sales surpass expectations while the IMF also hiked their Chinese growth forecast for this year.
On Thursday, Australian jobs data also beat expectations with 42.0K jobs added in May (f/c. +10.0K). US crude futures lost 1.9% for the week which may have limited gains.
The minutes from the RBA’s June policy meeting are out tomorrow and could provide more details of the trade-off between slowing economic growth and ongoing strength in the housing market.
The Canadian Dollar was one of the best performing currencies last week, boosted by hawkish central bank rhetoric. Bank of Canada Deputy Governor Wilkins kicked things off on Monday when he said they will assess whether the considerable monetary policy stimulus presently in place is still required.
Governor Poloz followed on Tuesday, adding that the rate cuts put in place in 2015 have largely done their work and it looks like the economy is gathering momentum. Data impulses were limited although US crude futures lost 1.9% for the week which may have limited gains.
This week, we await retail sales on Thursday and CPI data on Friday.
NEW ZEALAND DOLLAR
After a positive start to the week, the New Zealand Dollar dropped on Thursday after first-quarter GDP figures fell short of expectations. An improving economic outlook has been driving the NZ Dollar higher in recent weeks so this was somewhat of a shock for investors.
The RBNZ policy decision on Wednesday will be the focus for investors this week where rates are seen on hold at record low levels. We also await the GDT auction on tomorrow and credit card spending on Friday.
The Swedish Krona was underpinned by stronger-than-expected domestic macro data last week.
CPI figures surprised to the upside on Tuesday while the unemployment rate dropped on Thursday to 7.3% from 7.5%. The latest Prospera survey also showed an uptick in inflation expectations which lent further support to the Krona.
This week, we await unemployment data tomorrow followed by consumer and manufacturing confidence indicators on Wednesday.