Daily Currency Update

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July UK Retail Sales gain credited to England's World Cup streak

By Jake Trask

The “Harry Kane” effect was credited for giving UK Retail Sales a boost in July with the closely followed gauge printing 0.7% m/m growth when 0.2% was priced in to the market. GBP/USD popped higher briefly testing 1.2750 before retracing, although the news was good, it isn’t indicative of a UK economy that is performing well. Moreover a temporary factor assisted by unusually warm weather. Cable continues to trade around the 1.27 handle at present as we begin a quiet end to the week.

USD/TRY seems to have found its feet around the 5.8 handle after the panic that book-ended last weekend seems to have calmed. Although we are far from a risk-on environment with ongoing concerns over Turkey and trade re: China/US continuing, things do seem to have settled down stopping the drop seen in commodity currencies and other risk assets.

In America yesterday, Donald Trump apparently talked up the dollar in an unusual tweet from a man known to prefer a weaker greenback. The tweet read: “Our Economy is doing better than ever. Money is pouring into our cherished DOLLAR like rarely before, companies' earnings are higher than ever, inflation is low & business optimism is higher than it has ever been. For the first time in many decades, we are protecting our workers!”

Adding moral support to the dollar was Trumps chief economic advisor, Larry Kudlow. Kudlow said in an interview with CNBC that the dollar was “king” and was a sign of “confidence” in the economy. Although there were no huge swings in EUR/USD on the news, it's an interesting change of tone from the administration. USD/JPY has failed to hold the 111 handle retracing back down to 110.73 at the moment.

EUR/USD has made a few plays to break above 1.14 over the past 24 hours however has failed to get a grip above the big number. The euro sell off seen on the back of the turmoil in Turkey has stopped for now; however, it’s going to be a headwind for some time for the shared currency. As well as concerns re: Turkey, the tragic events seen in Italy this week when a bridge collapsed is also weighing heavily on the minds of many. With the newly formed coalition only in power for a few months how they handle this tragedy will be closely monitored. GBP/EUR trades at 1.1165.

The Aussie rallied overnight as Reserve Bank of Australia chief, Philip Lowe said in testimony to parliament that falling house prices were a welcome development for the economy. Property prices in Sydney and Melbourne are amongst some of the highest in the world and Governor Lowe highlighted that is was good this correction was happening whilst global growth was strong. AUD/USD is pushing back towards the .73 handle at present whilst GBP/AUD is down to 1.7470.

The only top tier data from our featured currencies comes from Canada later today with monthly CPI numbers being published. A monthly uptick of 0.1% is expected, matching last month’s price rise. USD/CAD continues to trade between 1.3110 and 1.3180 like it has over the past 48 hours. GBP/CAD sits at 1.6720.

NZD/USD has broken above .66 this morning as some risk on trade returns to the markets. Stock markets are mostly in the green this morning after a volatile week on the back of events in Turkey. We could see further gains for the kiwi today as fears over Turkey start to fade. GBP/NZD trades at 1.9265.