Retail sales increased by the most in one and a half years.
• UK House Market slows – Stalling economy adds more need for QE.
• Microsoft office blown-up by arsonists – Austerity still aggravating Athenians.
• US Durable Goods Orders Rise – Dollar earns half a cent vs. Pound.
• Interest rate cuts ineffective down under – Australian house sales decelerate.
• EU summit unlikely to solve EZ debt crisis – But could improve sentiment for AUD, CAD, and NZD.
Retail sales increased by the most in one and a half years in June as proud British citizens took it upon themselves to celebrate the Queen’s Diamond Jubilee. Despite Prince Phillip’s unexpected illness the double bank holiday provided a much needed boost to UK high streets with families and communities basking in the glow of the British monarchy.
Although the CBI Distributive Trades Survey increased by 42% in June, credit ratings agency Standard Poor’s said that it did not expect consumers to bolster UK GDP in the near future, and the result did nothing to enhance the Pound. Mortgage lending dropped in May for the first time since records began in 1987 suggesting that economic recovery in the UK may be held back by the stalling housing market. Subsequently the Pound emerged as the worst performer of the day losing over half a cent to the US Dollar, Australian Dollar, New Zealand Dollar, and a third of a cent to the Canadian Dollar and Euro.
Protests of two very different varieties took place yesterday in the southern Eurozone. In Italy 42 statisticians, researchers, and computer technicians delayed the release of Italian Business Morale data by 30 minutes, in protest against salary freezes in the public sector. Whereas in Greece armed arsonists drove a stolen truck into Microsoft’s head office in Athens causing approximately €60,000 worth of damage. The attack is thought to be a reaction to the country’s harsh austerity measures.
The Euro escaped unscathed from a relatively weak German Consumer Price Index print yesterday. The headline German inflation figure slowed from 1.9% in May to 1.7% in June, but with all eyes looking ahead to the EU summit the single currency managed to shrug off the cooling figure and post a small intraday profit of 0.34 cents against the Pound.
However, both Cyprus and Spain had applications for financial assistance accepted by the EFSF and ESM Eurozone rescue facilities, Portuguese Prime Minister Pedro Passos warned that: “There are no reasons to create expectations that are too high of the results of the European Council,” and European Central Bank policymaker Peter Praet commented on the possibility of ECB interest rates dropping below 1% – all of which could be potentially damaging to the single currency over the coming weeks.
Earlier this morning the German Statistics Office released their unemployment figures to show a 7K increase in June, bringing the Unemployment Rate up to 6.8%. Whilst still a stronger figure than most of its major counterparts the slight increase in jobless Germans allowed the Pound to claim some cash-back on the Euro and rally back towards 1.2500.
Yesterday the US Dollar benefitted from a surge in Durable Goods Orders in May. The figure rebounded from a decline of -0.2% in April to an encouraging 1.1% growth in May which allowed the US Dollar to appreciate by half a cent against the Pound.
At 6:16 this morning it was announced that Nationwide Housing Prices fell -0.6% in June, but oddly Sterling posted gains against the US Dollar immediately following the release. One explanation is that the weak ecostat was interpreted as a precursor to further monetary stimulus from the BoE, as it suggests that accelerated deflation may be on the horizon. Whereas impending quantitative easing measures are usually viewed as negative for the Pound, under this circumstance it appears that GBP/USD traders took the possibility of further stimulus to be supportive of the riskier Pound when paired against the safe-haven US Dollar.
Apart from some minor Teranet National Bank data which failed to excite, yesterday was a quiet one for the Canadian Dollar. And with nothing on the agenda today either it seems that the crisis summit in Brussels will hold a lot of sway in CAD movements. Strong support for the global economy, and a set of stimulus to support risk appetite will send the ‘Loonie’ over the moon, but if EU leaders fail to inspire then the Canadian Dollar could be eclipsed by the Pound and the ‘Greenback’.
New Home Sales in Australia increased by 0.7% in May, following a larger acceleration of 6.9% in April. The relatively mild increase in New Home Sales suggests that interest rate cuts are yet to have a widespread impact on the national economy. Despite the relatively soft figure the Aussie Dollar still managed to post gains of 0.3 cents immediately after the release earlier this morning.
New Zealand Dollar
The National Bank of New Zealand released their Business Confidence and Activity Outlook results for June at 01:00 this morning. The stats came in at 12.6% and 20.8% respectively, marking a 15-month low for both figures which enacted to stall the ‘Kiwi’s’ advance. The EU summit in Brussels will be pulling all the strings over the next two days as global markets await a convincing set of pro-growth measures to stimulate risk appetite and support the sentiment-linked currencies.
Data Released Today
June 28th 01:00 AUD New Home Sales (MoM) (May) 0.7%
June 28th 01:00 NZD NBNZ Business Confidence (June) 12.6
June 28th 07:55 EUR German Unemployment Rate (June) 6.8%
June 28th 08:30 UK Gross Domestic Product (QoQ) (Q1) -0.3%
June 28th 08:30 UK Total Business Investment (YoY) (Q1) 14.2%
June 28th 09:00 EUR Eurozone Consumer Confidence (June) -19.6
June 28th 12:30 US Gross Domestic Product (Annualized) (Q1) 1.9%
June 28th 21:01 UK GFK Consumer Confidence Survey (June) -29
- Pound to Euro, US Dollar exchange rate: Sterling was boosted by the news that UK Retail Sales rebounded from April’s poor figure of -2.4%
- The Pound rallies for a second day against the majors, after retail sales climbs to the highest level in two years
- Sterling to US Dollar and Euro exchange rates NEWS FLASH – UK retail sales plummet, as concerns in Europe escalate
- The Pound falls against the majors after UK retail sales dropped to the lowest level in almost two years
- The Pound declines against the Euro after UK retail sales at the weakest annual rate in 17-months