Risk appetite recovered to some extent amid expectations that the US and China would declare a truce in trade war at the G20 Summit.

Risk appetite recovered to some extent amid expectations that the US and China would declare a truce in trade war at the G20 Summit.

Bond yields recovered slightly, and expectations of an aggressive 0.50% Fed rate cut at the July meeting also continued to ease. Demand for defensive assets faded to some extent with the yen and Swiss franc losing ground.

Gold also retreated and equity markets secured net gains in Asia on Thursday. US oil prices strengthened after a very larger inventory draw before being hit by a significant correction.

Commodity currencies made net gains with gains in oil prices pushing the Canadian dollar to 4-month highs, but Sterling remained in the doldrums.

After posting fresh 17-month highs, Bitcoin registered a sharp correction.

In testimony to the Treasury Select Committee, Bank of England officials reiterated that limited and gradual interest rate hikes were likely if the economy met the bank’s forecasts. Ramsden stated that the trade outlook had weakened since the May inflation report while Saunders stated that the economy was likely to perform better than expected if there is a smooth Brexit in relative global terms, the central bank stance provided some Sterling protection.

Boris Johnson reiterated his determination to leave the EU on October 31st and political uncertainty continuing to hamper the UK currency, although he also stated that the chances of a ‘no-deal’ outcome were very low which maintained an important element of confusion. Global risk conditions will remain important with some Sterling support if trade tensions eased.

GBP/EUR held around the 1.1500 area, but GBP/USD found support above 1.2650 and settled below 1.2700 with the currency unable to make headway on Thursday with markets wary over potential month-end selling.

Economic Calendar

09:00Business Confidence(JUN)100.4102
09:00Consumer Confidence(JUN)110111.8
10:00Euro-Zone Consumer Confidence(JUN)-6.5-6.5
13:00Germany CPI (M/M)(JUN)--
13:00Germany CPI (Y/Y)(JUN)--
13:00Germany Harmonised CPI (M/M)(JUN)--
13:00Germany Harmonised CPI (Y/Y)(JUN)--
13:30USD GDP Price Index (Q/Q)-0.50%
13:30USD GDP (Annualized)3.10%3.10%
13:30USD Continuing Jobless Claims1.665K1.662K
13:30USD Initial Jobless Claims220K216K
15:00USD Pending Home Sales (M/M)(MAY)--1.50%
15:00USD Pending Home Sales (Y/Y)(MAY)-104.30%

*All rates shown are indicative of interbank rates and should only be used for indication purposes only. It is important to note that foreign exchange rates fluctuate and that rates may vary depending on the amount and the base currency that is purchased or sold. Rates are correct as of 8:00am UK time. CentralFX are not responsible for the rates shown.