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Will a Hawkish BoC Buoy the Canadian Dollar?

Pound News: Annual Retail Sales Rise at Slowest Rate on Record

On Tuesday, the British Retail Consortium (BRC) revealed that annual UK sales rose at the slowest pace since records began in 1995, only edging up by 0.6%. Brexit pessimism hit UK shoppers as consumers put off non-essential purchases.

While Brexit pessimism has dampened sentiment in Sterling so far this week, the Pound could claw back some losses following the release of May’s GDP data this morning.

If the UK economy expands more than forecast it could provide Sterling with an upswing of support.

Euro News: Single Currency Under Pressure as German Recession ‘Looks Unavoidable’

Tuesday was a quiet day for notable Eurozone data releases, although the European Central Bank’s new Chief Economist Philip Lane held an online Q&A. During this, Lane revealed that the ECB was ready to take further action to stimulate growth and inflation if needed.

Meanwhile, on Monday data showed that Sentix German investor confidence plummeted to the lowest level in almost a decade. Single currency sentiment was left dampened as Sentix Director Patrick Hussy stated that a German ‘recession looks unavoidable.’

Today is going to be another quiet day for economic data releases, so it’s likely the Euro could edge up if May’s Italian industrial output rises higher than expected.

US Dollar News: Federal Reserve Chair Jerome Powell’s Job ‘Safe’

On Tuesday afternoon the US Dollar rose against Sterling as White House National Economic Advisor Larry Kudlow insisted that Federal Reserve Chair Jerome Powell’s job is safe.

Speaking to CNBC, Kudlow stated that Powell’s job was ‘safe’ and ‘there is no effort to remove him’ despite US President Donald Trump’s repeated criticisms of the Fed chair.

Looking ahead to this evening, the US Dollar could remain under pressure ahead of the FOMC minutes. If the minutes support the case for more than one rate cut over the rest of 2019 the US Dollar could be pressured lower.

Canadian Dollar News: CAD Rises Ahead of BoC Interest Rate Decision

On Tuesday, disappointing Canadian building permits data revealed that permits slumped by -13% in May following April’s rise of 16%. This was the largest monthly slump in building permits since November 2016.

However, this did little to stop the ‘Loonie’ rising against Sterling.

Looking ahead to this afternoon it is likely the Canadian Dollar will remain under pressure ahead of the Bank of Canada’s (BoC) interest rate decision and monetary policy report.

However, if the bank’s tone is hawkish, it could provide the ‘Loonie’ with an upswing of support.

Australian Dollar News: ‘Aussie’ Under Pressure as US-China Trade Talks Resume

The Australian Dollar was left under pressure as the United States and China were scheduled to resume trade talks after a three month hiatus.

However, on Tuesday reports revealed that the differences between the two sides showed little sign of narrowing, weighing on the risk-sensitive AUD.

Looking ahead to the rest of today, it is likely the ‘Aussie’ will remain under pressure from reports on the progress of US-China trade discussions. If reports suggest that talks are not making much progress, Australian Dollar sentiment could be left dampened.

 

Upcoming Data:

Wednesday 10th July

09:30     GBP GDP

09:30     GBP Manufacturing Production

09:30     GBP Industrial Production

15:00     USD Fed Chair Powell Testifies

15:00     CAD BoC Interest Rate Decision

15:00     CAD BoC Monetary Policy Report

15:00     CAD BoC Rate Statement

19:00     USD FOMC Minutes

23:45     NZD Electronic Card Retail Sales

Alastair Archbold
Currency Trader
T: 01442 892 062

 

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