Boris’ Jubilee hangover

The short trading week in the UK set the tone for the currency market, without any major currency moves seen. News from the US was suggestive of a continuation of its aggressive hiking cycle.

The UK was off and by most accounts enjoyed celebrating our Queens platinum jubilee over the extra bank holiday, the rest of the world could see a sense of post-war like togetherness with 1 in 4 roads in the UK closed at some point for street parties.

Coming in this morning the hangover will be starting to kick in for the leader of our government. Sir Graham Brady has announced that there will be a vote of no confidence this evening, which begs the question is Boris’ time finally up?

USD

Last week there was a hole raft of data from the States; another big non-farm payroll figures were out at 390K, but the US dollar failed to make any headwinds due to the unemployment rate increasing to 3.6%. whilst there weren’t any dramatic moves, they can come later. Even though the unemployment rate was worse than last time both figures combined suggest a strong US economy and will no doubt be a factor as to whether the Fed raise interest rates by 25 or 50 basis points in their next meeting.

Again, any meaningful data will have to wait until Friday for the US. The key inflation indicator “CPI” is due and is expected to drop albeit by 0.1%. a clear argument that shows the Fed’s aggressive hiking cycle has at very least stemmed the tide.

GBP

Last week Sterling started on the front foot against most currencies however this was cut short due to the bank holiday.

Coming into this week seems to be relatively quiet on the data front for Sterling, this week the pound will be on the ropes and will be very responsive to how the other major currencies perform. The prospect of a vote of no confidence for Boris Johnson in the conservative party will drive the pound into further losses against all major currency pairs, as history dictates political uncertainty will be negative for GBP.

EUR

This week all eyes will be on Thursday, at 11:45AM the European Central Bank will release their decision on the Interest Rates, the ECB are not expected to hike until the end of Q3, however any unexpected movements will surely cause large ripples in the markets. Either way we can expect President Lagarde to shed some light on the situation.

Elsewhere

The Reserve Bank of Australia will have their Interest rate decision on Tuesday this week and are expected to hike 0.25% up to 0.6%, anything other than this will show negatively for the Aussie dollar.

Data

Wednesday 8th June – 09:00 AM

EUR – GDP Expected to remain at 5.1%

Thursday 9th June – 11:45 AM

EUR – Interest rate decision expected to remain at 0.00%

Friday 10th June – 12:30 PM

USD – CPI expected to drop to 8.2% from 8.3%

 

written by Elliot Collier

2022-06-06T08:00:18+00:00 June 6th, 2022|