Market Drivers June 29, 2017
Cable takes out 1.3000
Haldane stresses hikes again
Nikkei 0.45% Dax -0.14%
Europe and Asia:
GBP UK Mortgage approvals 65K vs. 64K
EUR Consumer Confidence 111.01 vs. 109.5
USD GDP 8:30
USD PCE 8:30
USD Weekly Jobless Claims 10:00
It’s been another good night for anti-dollar traders as both EURUSD and GBPUSD set fresh monthly highs in Asian and early European dealing.
The euro continued its relentless climb higher breaking above the 1.1400 level in Asia session trade and so far has managed to hold the gain in European dealing. Despite the fact that ECB tried to walk back Mario Draghi’s comments on Tuesday, the market appears to be convinced that ECB will move to a more neutral bias relatively soon.
EZ data continues to show steady improvement while US data has been much more problematic lately with Durable Goods and Pending Homes both missing their marks this week. Today’s 2nd revision of Q1 GDP could be pivotal to North American trade. The market anticipates no change at 1.2% but any upward revision could provide the greenback with a much-needed boost as it would suggest that the underlying growth is better than the initial read. However, if the GDP numbers are actually revised lower the hit to US yields could be significant.
Right now the market is operating under the assumption that the Fed will hike rate at least one more time in 2017. But any slowdown in US growth could quickly upend that assumption and help push EURUSD to the key 1.1500 level this week.
Meanwhile, cable also saw a lot of action in London trade with the pair running through stops at the 1.3000 level before profit taking sent it back towards 1.2950. Better mortgage data and continuing hawkishness from BoE Andy Haldane regarding the need to fight inflation pushed the pair higher. Still, 1.3000 is a formidable resistance level for sterling and given the fact that BoE chief Mark Carney is nowhere near as hawkish as Mr. Haldane we doubt any action on the part of the central bank anytime soon.