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UK Growth Shows Shock Contraction as US Dollar Rebounds from Weekend Lows

Pound News: Contractions in UK Monthly Growth Leads to Fresh Sterling Losses

As the UK Conservative Party’s leadership contest gets underway, the Pound is under pressure and yesterday’s fresh economic data only made it less appealing.

A slew of UK ecostats, including GDP growth, manufacturing production and industrial production all printed well short of expectations in April. The results revealed steep monthly contractions, with the overall growth figure coming in at -0.4% rather than the expected -0.1%, worsening concerns about how Brexit is impacting the economy.

Britain’s April jobs market report will be published today, but unless it is particularly surprising investors will be hesitant to make any moves on the Pound.

 

Euro News: EUR Strength Limited by Rebounding Rival USD

The Pound to Euro exchange rate fell due to Pound weakness yesterday, but the shared currency would have seen even stronger gains if not for the US Dollar’s rebound, as the Euro and US Dollar often see a negative correlation with each other.

The Euro also lacks much in the way of fresh support. While the European Central Bank (ECB) was less dovish than expected last week, recent Eurozone data has been underwhelming and investors are anxious that the ECB could take a more dovish turn soon.

No notable Eurozone data will be published today, leaving Euro investors reacting to US Dollar strength, Eurozone political news, and anticipating tomorrow’s speeches from ECB officials.

 

US Dollar News: USD Rebounds as US-Mexico Trade Tensions Disappear

For much of last week, a combination of US trade rhetoric and weak data left Federal Reserve interest rate cut bets rising. This led to US Dollar losses, but some of that pressure subsided when markets opened yesterday.

The US and Mexico reportedly reached a deal preventing the implementation of fresh tariffs on Mexican goods. Concerns about how the US economy would be impacted reduced, and the US Dollar recovered yesterday.

Some US business optimism data will come in today, but USD investors are more eagerly anticipating data that could influence Federal Reserve interest rate cut bets, such as tomorrow’s inflation report.

 

Canadian Dollar News: US-Mexico Deal and Canadian Jobs Market Strength Keeps CAD Strong

The Canadian Dollar continues to be one of the market’s more appealing major currencies, bolstered by various factors last week both domestic and global. As Canada is part of the North American trading bloc, CAD investors were pleased that the US and Mexico appeared to have reached a deal on trade.

On top of this, the Canadian Dollar continued to find support in last week’s impressive Canadian job market report, which indicated strength in the economy.

No notable Canadian data will be published until Thursday, leaving Canadian Dollar investors to react to global trade issues.

 

Australian Dollar News: USD Rebound Leaves AUD Unappealing

For most of last week, the Australian Dollar avoided losses despite the Reserve Bank of Australia cutting interest rates, and weaker-than-expected growth data.

As a result, when the US Dollar rebounded slightly due to trade issues yesterday, the Australian Dollar shed some of its recent support. Despite this, the ‘Aussie’ was still able to hold its ground versus an unappealing Pound.

Australian Dollar investors will be digesting NAB’s Australian business confidence data today, and anticipating tomorrow’s Westpac consumer confidence data. Of course, the US Dollar’s strength will remain influential as well.

 

Upcoming Data

 

Tuesday, 11th June

02:30    Australian Business Confidence

09:30    UK Job Market Report

11:00    US NFIB Business Optimism

13:30    US PPI

15:00    US IBD/TIPP Economic Optimism

 

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To keep up to date with the Euro, visit the Euro blog in our Currency News section.

 

Joe Mayhew

Senior Currency Broker

Jam@fcgworld.co.uk

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