UK political pressures resume.
The Euro-Zone manufacturing index dipped to a 22-mnth low of 52.0 from 54.6 previously and below consensus forecasts of 53.9 while the services-sector index declined to a 5-month low of 52.8 from 56.1 and well below expectations of 55.5.
Overall business expectations also declined to the lowest level since October 2020 as new-orders growth stagnated. There was a slight easing of inflation pressures, although cost and price increases remained very high in a historical context.
The US PMI manufacturing index dipped to a 23-month low of 52.4 for June from 57.0 previously and below expectations of 56.0 while the services-sector index also fell to a 5-month low of 51.6 from 53.4 and below consensus forecasts of 53.5.
New orders declined for the first time since July 2020 with export orders also contracting and overall business optimism declined sharply. Employment growth slowed and, although inflation pressures remained strong, the increase in prices slowed to the lowest rate since March 2021.
Fed Governor Bowman stated that another 75 basis-point rate increase will be appropriate in July with hikes of at least 50 basis points at the next few subsequent meetings which was a notably hawkish stance.
Fed Chair Powell stated that core PCE inflation has tracked down from hot levels of last year. Powell added that he expects inflation to move down gradually, but reiterated that the inflation fight is unconditional.
Despite hawkish Fed rhetoric, the dollar lost some ground as unease over the economic outlook pushed longer-term yields lower.
US currency selling was limited by a lack of confidence in other major currencies and reservations over the global economy.
The UK PMI business confidence data recorded a decline in the manufacturing index to a 16-month low of 53.4 for June from 54.6 the previous month and in line with consensus forecasts. The services-sector reading was unchanged at 53.4 and slightly above market expectations of 53.0.
The Conservative Party lost both of the UK by-elections held on Thursday which was expected, but the resignation of the party Chairman will add to pressure on Prime Minister Johnson.
Consumer confidence dipped to a record low at -41 from -40 previously while retail sales declined 0.5% for May.
The Norges Bank increased interest rates by 50 basis points to 1.25% compared with market expectations of 25 basis points. It also stated that rates were likely to increase again in August with the bank also forecasting a higher peak above 3.00%.
The Euro dipped sharply after the weaker than expected PMI data. Although there was a sharp reversal after the weaker than expected US data, the Euro failed to sustain the recovery. The EU granted Ukraine candidate status, maintaining reservations over Russian retaliation. The Euro was sapped by concerns over gas supplies from Russia. Lower yields undermined the US dollar, but selling was limited.
EUR/USD found support near 1.0500 and advanced to around 1.0540 on Friday. USD/JPY slipped sharply to lows near 134.25 before a recovery to 134.75.
The Swiss franc strengthened further as global yields declined, but retreated slightly from intra-day high. EUR/CHF dipped to 3-month lows below 1.01 before a slight recovery. USD/CHF settled just above the 0.9600 level.
Sterling was relatively resilient as weak Euro-Zone and US data provided some protection. GBP/USD fund support above 1.2200, but failed to test 1.2300 to trade around 1.2270
Global growth concerns undermined commodity currencies. AUD/USD dipped below 0.6900, before steadying just above this level on Friday. USD/CAD also moved above the 1.3000 level before a limited retreat to 1.2985.
|07:00||GBP Retail Sales ex-Fuel (Y/Y)(MAY)||-8.40%||-6.10%|
|07:00||GBP Retail Sales ex-Fuel (M/M)(MAY)||-0.20%||1.40%|
|07:00||GBP Retail Sales (Y/Y)(MAY)||-4.50%||-5.70%|
|07:00||GBP Retail Sales (M/M)(MAY)||-0.70%||0.40%|
|09:00||Italy - Consumer Confidence(JUN)||102.7|
|09:00||Italy - Business Confidence(JUN)||109.3|
|09:00||German Business Expectations(JUN)||86.9|
|09:00||IFO - German Current Assessment(JUN)||99.5|
|09:00||German IFO Business Climate Index(JUN)||93|
|15:00||USD Michigan Consumer Sentiment(JUN 08)||59.1||50.2|
|15:00||USD New Home Sales(MAY)||591K|
|15:00||USD New Home Sales Change(MAY)||-16.60%|