- UK RICS housing data -18.1, best level since September 2007
- UK BRC retail sales data for June surged 1.4% y/y
- Recession easing, but global economy still faces major challenges. Recovery depends critically on restoring, stabilising U.S. financial system. Dollar’s role in world finance means U.S. has special responsibility to deal with crisis – U.S. Treasury Sec Geithner
- UK June CPI +0.3% m/m, +1.8% y/y. Exactly in line with median forecasts. Lowest annual rate since Sept 2007
- BOE MPC member designate Posen sees stronger sterling vs euro in medium-term. No one can predict fx movements in short-term
- Euro zone May industrial output +0.5% m/m, -17.0% y/y, vs median forecasts of +1.5%, -17.5% respectively
- ZEW institute July economic sentiment index 39.5 vs 44.8 in June, some way worse than median forecast of 47.8
Good morning for sterling, cable up at 1.6325 from an early 1.6250, while EUR/GBP has slipped to .8565 from around .8600.
Sterling has been underpinned by RICS, BRC data released overnight (see above) The market will also have noted comment made by BOE MPC member designate Posen, that he sees sterling stronger than euro in the medium term.
Cable ticked higher early but was initally repelled by sell orders touted in the 1.6295/00 area, with Russia seen a notable seller up there. That led to an extended period of choppy price action until eventually the GBP bulls initiated a breach of 1.6300 and triggered some stops just above. We’ve been as high as 1.6344 before slipping back slightly.
EUR/USD attempted to rally early, moving from around 1.3980 to a session high 1.4015, but the pairing just hasn’t been able to hold above 1.4000 for any length of time. Sources note sell orders lined up at 1.4020/30.
The release of a weaker than expected ZEW July German economic sentiment index, weaker than expected euro zone May industrial output m/m data and comments from BOE’s Posen (see all above) have helped limit the upside for EUR/USD.
USD/JPY at 93.15 is little changed on the day. Sources note buy orders down at 92.80/90, sell orders up at 93.50/75 with small stops above there.
