Brexit the main driver?
Quote of the day: “Three steps to success: training, training, training!”
May 10th: Highlights
- Halifax house price data m/m: -0.8%
- BRC Retail sales: -0.9%
- Eurogroup Meetings
The latest YouGov poll on the EU referendum showed 42% for the ‘In’ camp and 40% ‘Out’. The current odds (1/3 ‘In’ Vs. 13/5 ‘Out’) haven’t moved around much recently. The debate should heat up this week as we have a number of key figures speaking on the subject. We are due to hear from George Osborne, Mark Carney and Christine Lagarde. Suggestion is that about 20% of voters are still undecided, so this week may well be a pivotal week for the referendum.
Domestically, we saw Retail Sales data out this morning from the British Retail Consortium. It announced a decline to -0.9% (down from -0.7%), noting in particular that online retail sales has dropped to a 3yr low, perhaps suggesting that the growth rate in the online sector has run out of steam. The retail sector has been hit recently with both BHS and Austin Reed going into administration.
Greece has pushed through the latest reforms, which were an important step to accessing the next tranche of bailout funding. The Eurozone Fin Mins agreed debt relief measures and Greece will now be granted a longer grace period on bonds maturing from 2018. If these reforms are upheld then this deal will enable more bailout cash to be released to Athens, which will be used to help cover forthcoming debt repayments. The ‘if’ is in recognition to domestic pressure and push back within Greece, following the passing of very unpopular pension & tax reforms.
Yesterday, the Euro was range bound and with no data due for release today another quiet day may follow. Yesterday, we saw Swiss unemployment (3.5%) and this morning German industrial production (-1.3%) was lower than expected (-0.2%).
The poor NFP data last week laid the foundations for this week as the likelihood of any further US rate increases this year has significantly declined. As such, expectations of increased divergent monetary policy are no longer a key driver of currency markets.
There is very little data on the calendar again today. China has posted y/y inflation data figure, which came bang in-line with expectations (2.3%). Germany and France are due to release Industrial Production data and Trade Balance data is due from Germany and the UK.
Japanese Fin Min, Taro Aso said he would be “prepared to undertake intervention” in FX market if JPY posts further gains. This is despite open opposition to this policy measure by the US. Could this start a Currency War? Watch this space.
Have a great day!
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