Risk appetite was boosted on Monday by President Trump’s decision not to push ahead with tariffs on Mexico.
The US employment report was weaker than expected with a non-farm payroll increase of 75,000 and wages growth was also slightly below expectations.
US bond yields declined further, and the dollar came under pressure as speculation over interest rate cuts intensified with a decline to 2-month lows.
Risk appetite was boosted on Monday by President Trump’s decision not to push ahead with tariffs on Mexico.
Global equity markets made headway, although mixed Chinese trade data maintained an important element of uncertainty.
The dollar regained ground as fears over the US outlook eased to some extent and bond yields recovered while European currencies lost ground.
After posting 2019 highs on Friday, gold retreated sharply with silver also registered notable losses. Improved risk sentiment underpinned oil prices with net gains.
Domestic influences were limited on Friday with markets focussing on global risk conditions and trade developments. EUR/GBP maintained a firm overall tone with a further test of 4-month highs around 0.8900 As the US currency came under pressure following the US economic data, GBP/USD strengthened to 2-week highs above 1.2750 before fading slightly.
CFTC data recorded a further increase in short, non-commercial Sterling positions to the highest level for close to 4 months, maintaining the potential for short covering if there is a shift in sentiment.
Conservative Party jostling continued over the weekend with front-runner Johnson suggesting he would withhold payment of the £39bn to the EU if there was no improvement to the current deal and leadership nominations will close later on Monday.
Bank of England chief economist Haldane stated that the time was nearing when a small increase in interest rates would be prudent Sterling was unable to gain traction on Monday as GBP/USD traded close to 1.2700.
Economic Calendar
| Expected | Previous | ||
|---|---|---|---|
| 09:00 | Industrial Output YY WDA(APR) | - | -1.40% |
| 09:00 | Industrial Output MM SA(APR) | -0.90% | -0.90% |
| 09:30 | GBP Industrial Production (Y/Y)(APR) | 0.50% | 1.30% |
| 09:30 | GBP Industrial Production (M/M)(APR) | 0.10% | 0.70% |
| 09:30 | GBP Manufacturing Production (Y/Y)(APR) | 1.30% | 2.60% |
| 09:30 | GBP Manufacturing Production (M/M)(APR) | 0.20% | 0.90% |
| 09:30 | GBP Trade Balance(APR) | -13.80B | -13.65B |
| 09:30 | GBP Trade Balance Non EU(APR) | -5.40B | -4.36B |
| 09:30 | Euro-Zone Sentix Investor Confidence(JUN) | 09:36 | 5.3 |
| 13:15 | CAD Housing Starts(MAY) | 196.4K | 235.5K |
| 13:30 | CAD Building Permits (M/M)(APR) | - | 2.10% |
| 15:00 | USD JOLTs Job Openings(APR) | 7.240M | 7.488M |