Market Info

UK retail sales excite but pound hit by flash crash

19/05/2017 | OzForex

United States Dollar:

Yesterday saw the release of US jobless claims which unexpectedly fell last week. The number fell to 232,000 against an expected 240,000 and now the number of Americans who are receiving unemployment benefits is at a 28 year low. Philadelphia Fed Manufacturing also came out much better than expected at 38.8. Both of these positive economic reports did help stem the recent loses for the USD but US stocks and commodity prices are still suffering from the huge political uncertainty. Trump has now branded this as the ‘single greatest witch hunt of a politician in American history!’

It has been a different story for the pound recently though and yesterday saw sterling surge once again, with GBP/USD breaking through 1.30 for the first time since late September. The catalyst was retail sales figures smashing expectations for April coming in at 2.3% compared to the 1.4% fall in March. Online sales are proving to be a particularly strong driver with UK consumers spending over £1bn online in April. Sterling also pared some of the recent losses against the euro, gaining 0.5% during the day. This week has seen a string of strong economic reports from the pound and it has gradually traded higher as a result. Late last night the pound tanked against both the euro and dollar as a flash crash at the end of the European trading session saw sterling drop below 1.29 before quickly retracing.

We expect a range today in the GBP/USD1.2950 to 1.3020

Euro:

Early yesterday France released its latest unemployment figures revealing some good news for Emmanuel Macron’s new government. Unemployment fell from a still rather high level of 10% down to 9.6%, further than anticipated. We also saw the accounts from the ECB’s latest meeting. Interestingly Chief Economist Peter Praet warned colleagues to be extra vigilant when talking about future interest rate decisions as the markets are particularly sensitive to any insights and guidance. It would appear that Praet is at loggerheads with his colleague Benoît Cœuré who stated yesterday that comments need to remain in line with facts and that the ECB had to change its stance on the recovery or risk losing credibility. This morning saw the release of German producer prices which climbed to their highest level in six years as inflation took its effect across the continent.

We expect a range today in the GBP/EUR rate of 1.1650 to 1.1720

Aussie and Kiwi Dollars:

The Australian dollar lost ground against sterling yesterday but managed to perform better than its commodity currency peers. This was despite the better than expected job report which saw 37,000 jobs added in April. This increase will help ease concerns from the Reserve Bank of Australia who expressly stated that labour activity was a worry. The Kiwi dollar traded similarly against sterling yesterday as it lost over a cent. This was driven by the strong retail sale figure from the UK. The next event of note from NZ is next weeks budget, due on Wednesday night.

We expect a range today in the GBP/AUD rate of 1.7380 to 1.7500

We expect a range today in the GBP/NZD rate of 1.8680 to 1.8800

Data Releases

AUD: No data

EUR: Consumer Confidence p>

GBP: No data

NZD: No data

USD: No data

 

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