GBP/USD was little changed this morning having touched a fresh four-month low on Friday at $1.2711 on Brexit woes. Cross party talks to reach a Brexit deal that could make it through parliament collapsed on Friday although weekend press reports have suggested Theresa May plans to make a ‘bold offer’ to secure a deal. Sterling is now over 3% down against the Euro and US Dollar in the last 17 days.
The Bank of England inflation report hearings take place tomorrow while April CPI figures are due on Wednesday.
The Dollar has been relatively resilient in the face of rising trade tensions between the US and China with few fresh developments over the weekend. Recent data impulses have been mixed meanwhile with weak retail sales and industrial production data released on Wednesday followed by stronger housing data on Thursday and a beat for Michigan Sentiment on Friday.
Looking ahead, Fed speakers are in abundance to start the week with Chair Jerome Powell the highlight at midnight (BST). The FOMC minutes are due on Wednesday, followed by durable goods orders on Friday.
The Euro has crept lower this morning to a fresh two-week low of 1.1151 with stronger-than-expected German PPI data offering little support. The single currency was pressured last week by Italian political concerns after Deputy PM Salvini took another swipe at EU budget rules. Euro Zone data will have provided some support meanwhile as Q1 GDP met expectations and core CPI for April was revised a touch higher to 1.3%.
ECB President Mario Draghi speaks on Wednesday while Euro Zone PMI, German IFO and the ECB minutes are due on Thursday.
The Yen was one of the main beneficiaries from the escalation in US-China trade tensions last week although safe-haven demand waned as Wall Street found some support on Thursday and Friday. Comments from Bank of Japan Governor Kuroda may also have played their part as he suggested rates could remain low beyond the Spring of next year.
Core machinery orders are due on Wednesday, PMI on Thursday and CPI on Friday.
The Swiss Franc saw some modest safe-haven demand last week although domestic impulses were limited beyond weaker-than-expected PPI data while no macro releases are currently scheduled for this week.
The Australian Dollar gapped higher overnight after the centre-right government defied the polls and achieved a surprise victory in the general election held over the weekend. AUD/USD topped out at 0.6925 versus Friday’s low at 0.6862 which marked the lowest level for the pair since January 3rd.
Recent declines in the Australian Dollar have been attributed to rising US-China trade tensions although the prospect of an imminent rate cut at the RBA is also playing its part. The RBA minutes are due tomorrow and could offer some clues ahead of the June meeting while PMI figures follow on Thursday.
NEW ZEALAND DOLLAR
The New Zealand Dollar edged higher overnight, rising in sympathy with its Antipodean counterpart after the centre-right government defied the polls and achieved a surprise victory in the Australian general election. NZD/USD hit a low of 0.6506 on Friday which was the lowest level in the pair since November 2018.
Retail sales are due Wednesday followed by trade data in Friday’s session.
The Canadian Dollar has kicked off the trading week with a modest bid, tracking gains in crude prices after Saudi Arabia signalled they would like to maintain the production cut plan. USD/CAD has been largely rangebound in recent trading session between 1.34 and 1.35 with Wednesday’s soft CPI data only providing brief support. Bank of Canada Governor Poloz said on Friday he anticipates rates will continue to rise once headwinds dissipate.
Looking ahead, retail sales are due on Wednesday.
The Swedish Krona gained last week after April CPI data surprised to the upside, pulling EUR/SEK back from the multi-year high set last Monday at 10.8503.
This week we await unemployment data on Wednesday and PPI on Friday.
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