It has been a busy news day, providing plenty of volatility across the different asset classes. First up, the US June Retail Sales came in much better than expected, at 0.4% mm in June, above expectation of 0.1%, while the ex-auto sales also rose 0.4%, above expectation of 0.1%. The GDP-feeding control group component rose by a strong 0.7% after an upwardly revised 0.6% figure for May. This underpinned the US$ and US yields which have both ended higher at the end of the session (DXY; 97.40, +0.49%, US10Y; 2.107%, +0.85%). In the FX pairs, Cable came under particular pressure despite the UK unemployment data showing that the headline rate stayed at 45-year low, at 3.8%, while wage growth accelerated faster than expected. Instead, Cable moved to a new 2 year low as the increasing prospect of a no-deal Brexit looms on the horizon after both contestants to be the next UK PM, Boris Johnson and Jeremy Hunt, rejected Irish backstop in any part of Brexit deal. The Euro was also weak, after the German ZEW Economic Sentiment deteriorated further in July, to -24.5 in July, down from -21.1 and missed expectation of -22. The Current Situation Index dropped to -1.1, down from 7.8 and also missed expectation of +5. The Eurozone Current Situation index dropped -6.9 to -10.6. The commodity currencies have topped out for now and are marginally lower against the US$.
Elsewhere, stocks ended mixed, 0.0%/-0.5%, under some pressure after Donald Trump said he could impose more tariffs on China if he wanted, while WTI fell heavily, down by 3% when Trump said he would agree to talks with Iran over their nuclear capacity and missile programme.
The metals were mixed. Gold fell by around 0.6% on the back of the firmer US$, while Silver squeezed sharply higher, ending up by 1.1% although there was no clear news as to why..
Looking ahead, Wednesday will see the UK (exp 0.0%mm, 2.0%yy) and EU CPI (exp 0.1%mm, 1.2%yy) for June, along with the US housing data; Building Permits (exp +1.3mio mm), Housing Starts (exp 1.26 mio mm, +1.6%%) and the beige Book. Ahead of that the calendar is rather thin, with just the Australian Leading Index due in Asia. CB speakers will include the ECB’s Coeure and the Buba’s Weidmann. Have a good day.
Economic data highlights will include:
Wed: Australian WBC Leading Index, UK CPI, PPI, RPI, EU CPI, US Building Permits, Housing Starts, EIA Crude Oil Stocks Weekly Change, Beige Book
Market moves, in brief:
FX: DXY 97.40 (+0.49%)
Bonds: US10Y; 2.107% (+0.85%), German 10Y; -0249% (1.54%), UK 10Y; 0.81% (1.91%), Australian 10Y; 1.414% (-3.35%), NZ 10Y; 1.605% (-3.31 %), China 10Y; 3.178% (-0.89%)
Stock Indices: DJI; -0.09%, S+P; -0.43%, NASDAQ; -0.34%, EUStoxx50; 0.055%, FTSE100; +0.60%, Shanghai Composite; -0.16%,
Metals: Gold $1405 oz (-0.65%), Silver $15.55 oz (+1.14%), Copper $2.70 lb (-0.41%), Iron Ore $121.20 per tonne (NYMEX) (+0.01%),
Oil: WTI $57.60 pb (-2.80%)
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