Sterling found some modest support last week with GBP/USD managing to log a weekly gain after six weeks of declines. UK manufacturing PMI surpassed expectations and investors will be hoping for similar outcomes for services tomorrow. Industrial and manufacturing production follow on Friday.
The Euro was at the mercy of political developments last week, rising and falling along with Italian and Spanish government bond yields. The single currency finished the week on the front foot once the 5-Star and League parties reached a deal to form a government with Conte as PM and more importantly without Savona as Finance Minister.
Euro Zone data will also have provided support with a flurry of higher-than-expected CPI prints including from Germany and the Euro Zone as a whole.
After touching a new YTD high at just above 95 last week, the Dollar Index has retreated towards the 94 level as the recent pullback in US government bond yields begins to take its toll. Friday’s payrolls report did provide a small lift after non-farm payrolls and average hourly earnings surprised to the upside. Factory orders are out later today, followed by ISM non-manufacturing and service PMI tomorrow and trade data on Wednesday.
The Japanese Yen was boosted by safe-haven demand last week amid the political uncertainty in Europen and rising prospects of a global trade war, although this did fade somewhat heading into the weekend and this trend has continued this morning. USD/JPY got down to a new multi-week low at 108.12 on Tuesday but bounced back above 109 before the week was up. Retail sales did surprise to the upside but were followed by a soft industrial production print. This week we await wage data on Wednesday and Q1 GDP on Friday.
The Swiss Franc was lifted by safe-haven demand last week amid political turmoil in Europe and rising trade war concerns. This pulled EUR/CHF further away from the 1.20 level to below 1.15 on Tuesday. This week we await CPI data on Wednesday and unemployment on Thursday.
AUD/USD broke above 0.76 this morning with the Australian Dollar boosted by a retail sales beat overnight. Investors are now looking ahead to the RBA policy decision tomorrow where the cash rates are widely expected to remain on hold.
The Canadian Dollar was choppy last week, rising on the hawkish tilt from the Bank of Canada on Wednesday before pulling back on weak GDP and rising trade war concerns towards the end of the week. USD/CAD got down to a low of 1.2824 on Thursday but has risen back towards the 1.30 level and is poised just below to start the trading week. Looking ahead, Canadian trade data, PMI and building permits are on Wednesday ahead of the labour market report on Friday
NEW ZEALAND DOLLAR
The New Zealand Dollar posted a weekly gain last week although on the back foot after terms-of-trade data fell short of expectations. NZD/USD had crept above 0.70 on Thursday since May 7th. This week is a quiet one for data with the ANZ commodity price index on Wednesday the only release of note.
The Swedish Krona moved off its worst level against the Euro last week as support from the recent Swedish Debt Office announcement dissipated. Swedish GDP figures released on Wednesday were mixed and largely ignored as was the better-than-expected manufacturing PMI print on Friday. We did also hear from Riksbank Governor Ingves who reiterated his long-term view that the Krona will appreciate. We look ahead to service PMI data due tomorrow.
The Norwegian Krone finished last week on the front foot after some encouraging labour market data – unemployment rose less than expected in May while the rate dropped to 2.2% from 2.4%. EUR/NOK is still holding above 9.5 however with the YTD low set on May 23 still intact at 9.4661. This week we await house price data tomorrow and manufacturing production on Friday.
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