Markets remained convinced that there would be a July Fed interest rate cut.
The dollar drifted lower as markets remained convinced that there would be a July Fed interest rate cut.
Chinese industrial production and retail sales data, released on Monday, were stronger than expected which protected risk appetite.
US equity futures edged higher after Friday’s S&P 500 close, although the Asian performance was less convincing amid on-going trade reservations.
Commodity currencies drew support from a soft US dollar and relief over the last Chinese data releases. Gold was supported by the soft US dollar, although firmer risk conditions and higher yields limited support.
Oil prices retreated on Monday as immediate Iran concerns eased slightly. Cryptocurrencies declined sharply during the weekend with bitcoin registering notable losses to around $10,000 as Ether crashed.
There was a small net increase in dollar long positions in the latest week with a small increase in net Euro shorts. EUR/USD settling around 1.1270 on Monday as the dollar drifted lower against commodity currencies with persistent Trump attacks on the Fed also undermining US support.
Bank of England MPC member Vlieghe stated that interest rates would be likely be cut to near zero if there was a ‘no-deal’ Brexit, although it was possible that rates might need to be increased if inflation expectations became un-anchored by Brexit developments. He did state that there could be small increases in rates in the case of a smooth Brexit, although the rhetoric was generally dovish.
Sterling benefitted from an element of short covering with expectations of Fed and ECB rate cuts providing net protection. GBP/EUR rallied to near 1.1150 while GBP/USD advanced to the 1.2570 area.
CFTC data recorded a further increase in the short Sterling position to 73,000 in the latest week and the highest level for over 9 months, maintaining the potential for liquidation of shorts if there is a shift in sentiment. Global growth and risk trends dominated on Monday with Sterling little changed ahead of important UK data releases during the week.
|07:30||CHF PPI (Y/Y)(JUN)||-0.90%||-0.80%|
|07:30||CHF PPI (M/M)(JUN)||0.10%||0.00%|
|13:30||NY Empire State Manufacturing Index(JUL)||-||-8.6|
|23:45||NZD CPI (Y/Y)||1.70%||1.50%|
|23:45||NZD CPI (Q/Q)||0.30%||0.10%|