USD - United States Dollar
The US Dollar was the most influential performer overnight and enjoyed broad-based gains against several counter parties. Well supported by domestic data, the US DXY surged 0.46 percent to reach 97.38 against a basket of currencies despite Federal Reserve Chairman Jerome Powell reiterating the risks to the outlook. The Greenback found its support from domestic data, which were undoubtedly on the stronger side. US Retail Sales led the way with a surprising, positive result above expectations, and the data also suggests that real consumer spending bounced back over the quarter. Industrial Production was, however, relatively flat, but the NAHB housing market index continued to trend higher. Overall, some of the components of GDP strengthened considerably overnight and saw upward revisions of annual GDP estimates.
Within this context, the case for interest rate reductions by the Fed has been undermined, but Powell nevertheless kept the door open for further rate cuts. Speaking in Paris, \ Powell reiterated his message from last week and commented that the Fed is carefully monitoring the downside risks to US growth, and will act appropriately to sustain expansion.
Yesterday's bullish job report in the UK did not stop the pound's rut, and indeed it underscores the fact that investors are focusing predominantly on the risk of no-deal Brexit scenario.
Both Johnson and Jeremy Hunt appear to be positioning themselves as the larger Brexiteer and despite the moves yesterday the currency markets are quite flat compared to historical volatility levels. The risk for investors could be the return of this volatility in September/October alongside sterling weakness.
1.1199 - 1.2222 ▲GBP/USD:
1.2382 - 1.2434 ▲USD/CAD:
1.3051 - 1.3093 ▼AUD/USD:
0.6996 - 0.7020 ▼NZD/USD:
0.6697 - 0.6728 ▲