The UK Leadership Race and FED Chair Powell Put the GBP and USD in Focus

Earlier in the Day:

Economic data was on the lighter side once more through the Asian session this morning. Key stats included the UK’s BRC Retail sales Monitor numbers and Australia business confidence figures.

For the Aussie Dollar

The NAB Business Confidence Index fell from 7 to 2 in June, which was in line with forecast. According to the June NAB Business Survey,

• The Business Conditions Index increased from +1 to +3, supported by a rise in the employment and trading sub-indexes
• Conditions in the mining sector were the highest, whilst the retail sector continued to trail.
• The decline in business confidence was reported to be broad-based across the industries, however.
• Looking across the sub-indexes:
  • The trading sub-index rose by 3 points to +6, with the employment sub-index rising by 3 points to +5.
  • Also on the rise, albeit modest, was a 2 point rise in the exports sub-index to +1.
  • The profitability sub-index held steady at -2, with the forward orders sub-index also remaining unchanged at -4.

The Aussie Dollar moved from $0.69657 to $0.69593 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.17% to $0.6960.

Elsewhere

At the time of writing, the Kiwi Dollar was up by 0.05% to $0.6626, while the Japanese Yen was down by 0.11% to ¥108.84 against the U.S Dollar.

In the Asian equity markets, it was a mixed bag early on. The Nikkei was up by 0.29% while the ASX200 was down by 0.25%. Joining the ASX200 in the red were the Hang Seng and CSI300, which were down by 0.44% and by 0.07% respectively.

The pullback in the U.S majors on Monday and a fall in the U.S futures weighed early on in the day.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic calendar. There are no material stats due out of the Eurozone to provide direction on the day.

The lack of stats will leave the EURO in the hands of trade war chatter and sentiment towards U.S monetary policy

For now, the lack of stats has put the EUR back on the defensive against the Greenback. This could all change later today should Powell continue to deliver dovish signals…

At the time of writing, the EUR was down by 0.01% to $1.1213.

For the Pound

It’s a quiet day ahead on the calendar, with no material stats due out of the UK today.

Earlier this morning, the UK BRC retail sales monitor provided direction. Retail sales fell by 1.6% in June, year-on-year, which was greater than a forecasted 1.5% decline. The fall follows on from a 3% decline in May.

While we would expect the negative numbers to be another red flag for the UK economy, the main event of the day is the Johnson v Hunt live televised debate.

The leadership race has reached its last hoorah and today’s debate is to be the decider, as conservative party members send in their votes via the postal ballot.

At the time of writing, the Pound was down by 0.02% to $1.2513.

Across the Pond

JOLTs job openings are due out later today that are unlikely to have a material influence on the Dollar following the June NFP numbers.

Of greater influence on the day will be FED Chair Powell and a number of FOMC members scheduled to speak through the day.

The markets will be looking to get a sense of what to expect on Wednesday when Powell gives testimony to Congress.

At the time of writing, the Dollar Spot Index was up by 0.03% to 97.416.

For the Loonie

Housing starts and building permits are due out later this afternoon. With the Bank of Canada interest rate decision on Wednesday in focus, we would expect the numbers to have a muted impact on the Loonie.

Expect any updates from the U.S – China trade talks and any news on the Middle East to have an impact.

The Loonie was down 0.05% at C$1.3102, against the U.S Dollar, at the time of writing.